Reliance Industries Limited (RIL) shares experienced strong buying interest on Monday, November 25, climbing 3% to reach an intraday high of Rs 1,304.45 on the NSE.
Currently, it is trading at Rs 1,296.50, reflecting a 2.46% increase as of 12:40 PM IST on the NSE.
This marks the second consecutive session of gains for the Sensex heavyweight, driven by improving market sentiment and optimistic brokerage outlooks.
Key Drivers Behind the Rally
The ongoing Russia-Ukraine conflict has pushed crude oil prices higher, a trend that experts believe will benefit oil-producing companies like Reliance.
According to Mahesh M Ojha, AVP—Research at Hensex Securities, the geopolitical escalation has caused crude prices to soar, boosting margins for oil producers holding buffer stocks.
He explained that Reliance could see improved quarterly financial performance due to these factors, particularly if crude prices remain elevated in the near term.
Strategic Business Insights
Retail and Telecom Contributions
In addition to the positive outlook for its oil business, Reliance continues to benefit from its diversified portfolio.
Its telecom arm, Jio, stands poised to capitalize on potential tariff hikes, enhanced 5G monetization, and improved data pricing. Analysts suggest these developments will support long-term growth.
Some softness in RIL’s retail segment may persist for the next few quarters, according to Citi. Despite this, the segment remains a significant contributor to the company’s overall performance.
Emerging Energy Ventures
Reliance’s foray into new energy initiatives has drawn attention from analysts. CLSA values the segment at $40 billion, underscoring its long-term potential. This division is seen as a future growth driver for Reliance, even though the market has yet to fully recognize its value.
Technical Analysis
Reliance Industries is currently trading at Rs 1,296.50, reflecting a 2.46% increase as of 12:40 PM IST on the NSE.
The stock shows positive momentum, particularly in the short term, having recently crossed the 5-day and 10-day Simple Moving Averages. Below is a breakdown of the key technical indicators:
Simple Moving Averages (SMA):
- 5-day SMA: Rs 1,296.43
- 10-day SMA: Rs 1,297.95
- 20-day SMA: Rs 1,286.55
- 50-day SMA: Rs 1,254.08
The stock is trading above the 5, 10, and 20-day SMAs, signaling bullish short-term momentum. However, it is currently nearing its 50-day SMA, which may act as a potential resistance level around Rs 1,254.08.
RSI
The RSI stands at 70.75, which is within the overbought territory. While this indicates strong buying interest and positive price action, it also suggests that the stock may face short-term pullbacks if momentum weakens.
It’s important to note that overbought levels can persist during strong uptrends, so short-term corrections may not necessarily lead to a reversal.
Institutional Investor Sentiments
Reliance Industries has seen notable shifts in institutional holdings:
- Mutual Fund Holdings: Increased to 8.56% in the October quarter from 8.03% in July.
- Foreign Institutional Investor (FII) Holdings: Declined to 20.08% from 21.19%.
This data reflects contrasting sentiments, with domestic funds showing increased confidence while foreign investors reduce exposure.
Global Factors Supporting Refining Margins
On the global stage, analysts predict that approximately 600,000 barrels per day of refining capacity will be shut down by 2025. This tightening of supply is expected to improve refining margins and boost Reliance’s free cash flow generation.
Investor Outlook
Reliance Industries is supported by strong fundamentals, including a Return on Equity (ROE) of 9.23% and a Return on Assets (ROA) of 4.70%. With a price-to-earnings (P/E) ratio of 25.22 and a price-to-book (P/B) ratio of 2.09, the stock is attractively valued relative to its peers.
Brokerage estimates suggest a 1-year upside potential of 23.08%, with a target price of Rs 1,600, underpinned by robust growth across refining, retail, telecom, and new energy segments.
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