NEW DELHI: It is not often that chartists and fundamental analysts converge on their outlook for a stock, more so when the outlook in bullish.
When they do, that too after a long phase of hibernation or consolidation, it means something good is on the cards.
The Reliance Industries (RIL) stock has come out of nowhere to suddenly turn favourite of market analysts after the company’s telecom venture Reliance Jio said it would begin charging users for data from April 1.
The stock surged nearly 10 per cent last week even as the charts yielded a breakout of the triangular pattern after nine years of underperformance.
From a high of Rs 1,608 on January 14, 2008, shares of the company have declined 26 per cent to Rs 1,182 on February 23, 2017, whereas the benchmark BSE Sensex has advanced nearly 40 per cent in the same period.
Technically, a symmetrical triangle is generally considered a period of consolidation before the prices move beyond one of the identified trend lines. Technical traders use a break below the lower trend line to signal a downward move, while a break above the upper trend line signals the beginning of an upward move. In the case of Reliance Industries, it broke the upper trend line last week.
Jai Bala, Chief Market Technician at Cashthechaos.com, said, “If you look at the charts from a very long term, RIL is coming out of a major consolidation. If you have not accumulated the stock till now, then it is still not too late. RIL is heading to a minimum of Rs 1,700 and then to Rs 2,200 thereafter.”
Fundamental analysts are positive on RIL shares after Mukesh Ambani said Jio has added 100 million subscribers in 170 days since its launch in September last year and the company plans to extend the network to cover 99 per cent of population by the year-end.
Sanjay Dutt, Director of Quantum Securities, told in an interview that the RIL stock can double in two to three years. “The RIL stock has the potential to double from here on if one wants to hold on to a largecap and remain invested there, because the kind of businesses it has incubated and from what we saw in the buildup over the past eight to nine years, the stock price is not reflecting that. It is my favourite largecap in terms of risk-reward ratio at this point.”