Can RIL slip below Rs 1,000 levels? Here's what technical charts suggest

As It began successfully trading above 200 DMA, the counter has more than doubled rising 175 per cent to Rs 1,417

Reliance Industries (RIL) breached the 200-day moving average (DMA) after February 2017 in trade on Wednesday. The stock is one of the strong constituents of benchmark indices that has a weightage of 8.93 per cent. It ranks second after HDFC Bank that has a weightage of 10.99 per cent in the Nifty 50.  Hence, a significant move on either side has the potential of having a major impact on the benchmark indices.

From February 2017, as it began successfully trading above 200 DMA, the counter has more than doubled - rising 175 per cent to hit Rs 1,417 as a lifetime high. This performance saw the RIL stock a key driver of the Index and became one of the admired stocks of investors. 

Whenever a counter breaches 200 DMA, the price seems to alarm the technical weakness in the trend. If the volumes stay higher during the breakdown then the signal gets even more convincing.  

For RIL, the 200 DMA stood at Rs 1,230 levels and has been broken on closing basis with decent volumes. This not only triggered a further fall, which led to a breach of its earlier support of Rs 1,190 levels, but also pushed many technical indicators in oversold tracks. From here on, every rise in the stock price may see resistance in the range Rs 1,250 - Rs 1,300.



The stock has closed negative continuously for six sessions and a rebound cannot be ruled out. That said, every upside may see selling pressure as the same supportive moving average now acting as a resistance. 

As the counter starts losing ground below Rs1,190, the monthly chart reveals a near-term support at around Rs 1120 – Rs 1,110 levels. If it sustains the gap-up area of Rs 1,100 – Rs 1,105, then one can see revival, otherwise the downward trend may lead to Rs1,020 – Rs1,040 going ahead.

On the weekly charts, the stock has broken the 50-WMA with above average volumes. The medium-term view remains cautious as counter breached significant moving averages. This may lead to a consolidation phase in the range of  Rs 1020 – Rs 970 - a level where the last buying was seen in April -  May 2018.  CLICK HERE FOR DETAILED CHART VIEW

Fundamental view

On a fundamental level, however, most brokerages maintained their bullish view on RIL, after the company posted a 7 per cent jump in its net profit for the April – June quarter of financial year 2019 – 20 (Q1FY20) at Rs 10,104 crore. Revenue came in 22.1 per cent higher than the Rs 1.41 trillion in the corresponding period a year ago. Gross refining margin (GRM) for the quarter came in at $8.10/barrel. READ MORE HERE

That apart, the Mukesh Ambani - led company is scheduled to hold its annual general meeting on August 12. After running trials at select cities, Mukesh Ambani-owned Reliance Jio’s broadband service Jio GigaFiber is expected to commercially launch on August 12. 

Announced last year at the Reliance Industries annual general meeting, the service was initially touted to launch in 1,100 cities simultaneously. READ MORE HERE