Before the oil-to-telecom giant's meeting on bonus shares on September 5, JM Financial predicted in a technical note that Reliance Industries Ltd. (RIL) will likely beat Nifty in the future.
"The RIL stock has been developing a pattern of higher top higher bottom, a bullish formation, following the drop from highs of Rs 3,218 level. It has begun trading above both its major short- and long-term moving averages, indicating that more strength is likely to emerge, according to JM Financial.
According to the local brokerage, every significant RIL sale that occurred over the last ten months finished just below the 100-day EMA level, which is now around Rs 2,958. The share was trading unchanged at Rs 3,033 on Tuesday.
Starting with a total future open interest of 48.7 million shares, the September F&O series differed from the previous three series average of 40 million shares. According to JM Financial, the majority of accumulation appears to be on the long side, indicating that bullish views are dominating the counter.
As of now, Reliance Industries' stock has lagged the Nifty by 8% every quarter. Mutual funds have a lower weight in the stock than the NSE200.
The ratio of RELIANCE to NIFTY (now at 0.1205 levels) is trading closer to the post-COVID-19 lows of 0.1159 level. The ratio is trading at 0.8 standard deviation below the mean values of 0.1294 over a 4-year data frame. It is at the 15 percentiles, according to JM Financial.
The firm announced on the day of its 47th AGM that the board will convene on Thursday, September 5, to deliberate and propose to the shareholders, for their approval, the issuance of bonus shares in a 1:1 ratio. This announcement has put the stock in the headlines recently. Although RIL did not reveal any plans to sell Reliance Jio Infocomm or Reliance Retail Ventures Ltd. at its AGM, experts were impressed by the company's clear path for the new energy industry.
