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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