Missed Reliance Industries’ historic 8% one-day rally? Here’s what technical analysts are saying

ETMarkets.com

Reliance Industries shares surged on Monday, marking their sharpest single-day rally in nearly seven years.

The sharp rally added a staggering Rs 1 lakh crore to the company’s market capitalisation, taking its total market value to Rs 17 lakh crore. Reliance reported a 41% year-on-year (YoY) rise in consolidated net profit attributable to shareholders to Rs 25,548 crore in the September quarter, compared with Rs 18,165 crore in the year-ago period. The growth was driven by strong contributions from its oil-to-chemicals and digital-services businesses.

Revenue from operations increased 29% YoY to Rs 3.32 lakh crore from Rs 2.58 lakh crore in the corresponding quarter last year. The oil-to-chemicals (O2C) segment was the biggest contributor to earnings growth, with EBITDA surging 68% YoY to a record Rs 25,203 crore from Rs 15,008 crore.

Here’s what charts are showing

“Reliance Industries is showing a strong recovery with a sharp bullish candle backed by significant volume, indicating fresh buying interest. The stock is attempting to break above its descending channel resistance near Rs 1,255 and has moved above the 20 and 50 EMAs,” Virat Jagad, Senior Technical Research Analyst at Bonanza told ETMarkets. He added that RSI has improved above 60, supporting positive momentum.

“A sustained breakout could open the way towards Rs 1,346, while levels near Rs Rs 1,250 remain a crucial support,” he added.

Sachin Gupta, Vice President of Technical Research at Choice said Reliance Industries share price is currently trading around Rs 1,252 after opening on a strong note. The stock has witnessed a positive shift in its short-term price structure, breaking above the 20 EMA and 50 EMA on the daily chart. However, it is currently facing minor resistance near Rs 1,263, where the 100 EMA is positioned. A decisive breakout above this level could further strengthen the recovery momentum. The RSI stands at 59.96, indicating improving bullish momentum and a gradual pickup in buying strength.

On the upside, Rs 1,310 is the next major resistance, aligned with the 200 EMA, followed by Rs 1,365. On the downside, Rs 1,200 is the immediate support, while Rs 1,150 remains the next important support zone. Sustained trading above the 100 EMA could pave the way for further upside towards the higher resistance levels, Gupta said.

What are brokerages saying?

Jefferies has maintained its Buy rating on the stock, with a target price of Rs 1,710, implying an upside potential of 47%. The brokerage said strong performance in the Oil-to-Chemicals (O2C) segment helped consolidated EBITDA beat its estimates by 6%, offsetting a 6% miss in Retail. Core Retail growth and EBITDA declined year-on-year due to a shift in the festive calendar and the continued impact of quick commerce (QC) expansion.

Jefferies expects O2C profitability to remain elevated through the winter, supported by damage to refining infrastructure in the Middle East and Russia. The brokerage has raised its FY27 and FY28 EBITDA estimates by 6% and 2%, respectively. It noted that the stock is trading more than 2 standard deviations below its long-term average, indicating extremely pessimistic investor expectations.

According to Jefferies, earnings upgrades and a recovery in Retail growth to the mid-teens could act as catalysts for a re-rating of the stock.

Nomura cuts Reliance target price to Rs 1,560 per share from Rs 1,690, forecasting fresh upside of 34%. The brokerage consolidated EBITDA came in 9% above its estimate. The beat was largely driven by stronger-than-expected performance in the oil-to-chemicals (O2C) segment, while upstream and telecom businesses performed in line with expectations. Retail EBITDA, however, fell 10% short of the brokerage's estimate.

The O2C business reported EBITDA of Rs 25,200 crore, compared with Nomura's estimate of Rs 20,300 crore. This marked a 48% sequential increase and a 68% YoY rise, making it the segment's strongest-ever quarterly performance. Despite broadly stable refining cracks quarter-on-quarter at multi-decade highs, with gasoil, aviation turbine fuel (ATF) and gasoline cracks rising 3.5 times, 3.7 times and 3 times, respectively, year-on-year, the sequential improvement was driven by a lower crude basket cost, better margin capture and higher throughput.