RIL crosses Rs 1,500; up 35% in 2019. Charts show Rs 1,760 is in the offing

Reliance Industries (RIL) has been one of the better performing stocks in calendar year 2019 (CY19) with a rise of around 35 per cent on a year-to-date basis. In comparison, the frontline Nifty50 index has gained 10 per cent rise during this period.

The recent up move has been triggered by Reliance Jio’s (RJio) plans of raising tariff, following a similar move by other incumbents – Bharti Airtel and Vodafone Idea. All three, however, have not indicated the quantum of hike.

At the fundamental level, analysts have given a thumbs-up to the plan to hike tariff by the incumbents, especially RJio.

“The tariff hikes are positive, in our view, and come five months ahead of our expectation. However, the move does not materially change our price targets, unless the hike is significantly above 20 per cent. Our estimates currently factor in a 20 per cent hike in early FY21. The key will be consumer behaviour post the hike; that is, whether it affects consumption,” wrote analysts at Jefferies in a recent report.

Here’s how the stock looks on the technical charts:

The stock has conquered Rs 1,500 level, which was an immediate resistance on a closing basis. On the daily chart, a jump of 10-15 per cent can be seen. A “Golden Cross” of 200-day moving average (DMA) with 100-DMA and 50-DMA with above average volumes in last few sessions suggests a rally towards Rs 1,700 and Rs 1,760 in the medium-term.

A decisive close above Rs 1,400 triggered short-covering, resulting in the new up move. That apart, a “flag pattern” with a breakout suggests Rs 1,420 and Rs 1,450 will act as an immediate support for the counter, as per the daily chart pattern.

The Relative Strength Index (RSI) has entered the overbought territory -  though it is an “Inverse Head and Shoulder” that broke out at the 65 level. Historically, such formations have taken the stock higher. Going ahead, if RIL counter witnesses any correction, then Rs 1,400 is likely to act as buying opportunity, as per weekly pattern. CLICK HERE FOR THE CHART