Reliance Industries shares in overbought zone; can they hit Rs 3,100 mark?

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Shares of Mukesh Ambani-led Reliance Industries Limited (RIL) were in focus today after brokerage Jefferies assigned a target price of Rs 3,100 on the large cap stock. Lakshya is up 13.45% over its previous close of Rs 2,732.40 on BSE. RIL stock has been rising for the last six sessions and has gained nearly 8% during this period. The index heavyweight closed at Rs 2,556.45 on November 23 and hit an intraday high of Rs 2,754.70 in the current session, registering a gain of 7.74% in six sessions.

However, the stock is in the overbought zone with Relative Strength Index (RSI) of 71.9. A value below 30 indicates that a stock is oversold and a value above 70 indicates that the scrip is overbought. The group’s stock has a PE of 28.9, which is higher than the industry PE of 12.64. This signals that the stock is overvalued.

Meanwhile, a total of 1.55 lakh shares of the firm changed hands, with a turnover of Rs 42.53 crore on BSE. The market cap of Reliance Industries increased to Rs 18.58 lakh crore. Currently, RIL shares are trading 3.78% away from 52-week high of Rs 2,855 hit on April 29, 2022. They hit a 52-week low of Rs 2,181 on March 8, 2022.

Jefferies cited the possibility of withdrawal of export duty on diesel and aviation fuel as one of the reasons behind its bullish stance on RIL.

The brokerage said export duty on diesel and aviation fuel has increased despite softening in Singapore GRM gross refining margin (GRM).

It expects the government to withdraw the export duty from the end of June with an over 30% correction in oil prices. Export duties on steel were recently withdrawn when rates fell 24% from the peak. The brokerage said Reliance’s FY24E EBITDA would get a 5% (US$1bn) boost if the duty on diesel and aviation fuel is withdrawn.

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Abhijeet BoraAssistant Vice President, Fundamental Research, Sharekhan expects the stock to reach Rs 3,050.

“The recent sharp rally of 6% in Reliance Industries stock can be attributed to hopes of removal of export duty on diesel/ATF, which could improve the earnings outlook for its refining business. Additionally, the recent The launch and expansion of 5G services in the U.S. is targeted to improve ARPU on a pan-India basis by 2023. RIL is our top pick and we expect its consumer-centric business – Jio (to increase telecom tariffs) in future. and ramp-up of home broadband) and retail (led by higher growth in retail, market share gains and new commerce). Overall, we project 30% profit after tax CAGR over FY2022-FY2024E In addition, potential value unlocking (with a possible IPO in the digital and retail consumer business) will add value to shareholders’ returns in the years to come. We have a RIL SoTP-based price target (PT ) has a Buy call at Rs 3,050.

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Abhijeet Tips2trade said, “Reliance Industries stock gained on strong rally due to launch of 5G services and recovery in global market. Technically, the stock is overbought and facing stiff resistance at 2790 Investors should book profits at current levels and wait.” For a drop near 2600-2610 to buy for a target of 2840-2990 in coming months.

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Commenting on the technical aspect of the stock, Tirthankar DasAshika Stock Broking, Technical & Derivatives Analyst, Retail, said, “The stock has retraced its corrective phase of last five months in bullish time frame, indicating correction and resumption of primary uptrend. A breakout has been entered. Bullish inverted head and shoulders-like formation, indicating a bullish resumption and offering a new entry opportunity. The breakout is supported by strong volume, underscoring large participation in the breakout area The stock has rebounded recently, taking support at 20 days EMA (currently at 2617 levels) as well, reaffirming the overall positive bias. To further add, on larger time frame, the stock It is trading in an uptrend in the middle of an ascending channel since Sept 20. Hence, one can expect the stock moves towards the upper panel of the pattern around Rs 3200 in medium to long term perspective.

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