Saturday, July 25, 2015

Jio aur Jeene Do !!

The above chart of Reliance Industries clearly shows the stellar runup from the sub-800 levels recorded in April 2015. It was a screaming buy at that point and has more than justified its presence in a model portfolio.
Having gained over 25% in a space of only 4 months and with its quarterly numbers also out, what’s in store for the stock? Here are my observations on that;
1)      Given the sharp nature of the rally, it’s quite obvious that short-term and derivatives traders should unwind their long positions or atleast hedge fully with ATM put options.
2)      Technically speaking, the stock has arrived at a point where it should find reasonable resistance to its immediate upmoves. The next week could see some sort of a sideways to a mildly downward reaction, if that happens, the low of the week should be used as a stop loss for long positions. On the upside, further rallies can be had only upon convincing crossover of the 1050-1060 levels with greater volumes.
3)       An intermediate term target of Rs.1350-1400 range appears achievable by March 2016.

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