Testing time for RIL; will the stock manage to hold its one-year support?

The index heavyweight lost significant ground after breaking its earlier support at Rs 2,600, and now trades 18 per cent lower from its 52-weeks high.

The shares of Reliance Industries (RIL) were down 3 per cent at Rs 2,305 on the BSE in Tuesday's intra-day, falling 7 per cent in the past two trading sessions. A sharp decline in stock price has seen, RIL's market capitalisation decline by Rs 1.17 trillion in past two trading days. READ MORE HERE

Here's how the stock looks on charts:

Reliance Industries Ltd (RELIANCE)
Likely target: Rs 2,500 and Rs 2,600
Upside potential:  7% and 12%

The shares of Reliance Industries are currently trading 18 per cent lower from its 52-week high of Rs 2,751.35. This steep downside emerged after the index heavyweight broke below its significant support level of Rs 2,600. The stock did make attempts to conquer this hurdle, but failed to do so owing to lack of follow-up buying and subsequently resulted in more weakness, according to the daily chart.

As of now, the stock price is hovering around the 200-day moving average (DMA), an indicator that traders and investors prefer wisely to gauge the underlying strength. The 200-DMA is placed at Rs 2,279, which is less than 2 per cent from the current price of Rs 2,321. The last time, the stock violated the same average was in March, 2021, almost a year ago.

One can view the current scenario as an "accumulation phase" considering that the present stock price trades around the most significant support. While the technical indicators exhibit a negative crossover, the reversal around the support may see a sharp upside in the direction of Rs 2,500-level, its immediate resistance, followed by Rs 2,600. CLICK HERE FOR THE CHART