Reliance shares: Why is it wise to buy RIL shares amid a falling stock market — Explained with 3 reasons; target price
Stocks to buy today | Stock market today | Reliance share price target: Following crude oil prices and the US bond yield remaining at the elevated levels, the key benchmark indices of the Indian stock market opened lower for the fifth straight session. The Nifty 50 index opened lower at 22,524 and touched an intraday low of 22,387 within a few minutes of the Opening Bell on Monday. The BSE Sensex opened downside at 72,990 and touched an intraday low of 72,514. However, both indices recovered sharply following the bottom fishing. This fall, during the early morning session, Reliance Industries shares touched an intraday low of ₹1,174.50 per share on the NSE. However, the Nifty and Sensex heavyweights soon came into the bulls' sights and turned green.
According to stock market experts, shares of Reliance Industries Ltd (RIL) are under pressure due to weak trends on Dalal Street. They said that the company's fundamentals are very strong, and amid the ongoing Middle East crisis and soaring crude oil prices, there is a need for top-quality oil refiners, and RIL fits this category. The US Secretary of State Marco Rubio's meeting with Mukesh Ambani should be seen from this angle. They said that Reliance's Jio Platforms value unlock will also benefit RIL, as it holds around two-thirds of the company's share capital. Pointing to the third reason for buying Reliance shares amid the current fall in the Indian stock market, experts said that the US-Iran war has fueled crude oil prices, but diesel prices have surged even more. RIL is a diesel exporter and is expected to reap this benefit as well.
Pointing towards the US Secretary of State Marco Rubio meeting Mukesh Ambani, Avinash Gorakshkar, Founder of Avinash Mentor Research, said, “Though it is no official confirmation, but Marco Rubio meeting Mukesh Ambani is expected to focus on the refining business, as a good number of refiners have gone out of business in the Middle East due to the prolonged US-Iran war. After the regime change in Venezuela, crude oil production is expected to jump from the current 1 million barrels per day to around 2.5 million barrels per day. However, Venezuelan crude oil is thick, and only a limited number of refiners can process it; RIL is one of them. Reliance Industries is already refining the Ural crude oil, imported from Russia, which is almost the same as Venezuelan crude oil.”
Gorakshkar said that the market is pricing Venezuelan crude oil for RIL at a discount, as with Russia, which will strengthen RIL's refining business and lead to a healthy balance sheet for the company.
Pointing towards a catch behind the soaring crude oil prices, Anuj Gupta, a SEBI-registered market expert, said, “When the US-Iran war began, Brent Crude oil price was at $72 per barrel and diesel price in the international market was around $110 per barrel. Today, after nearly eight months of the US-Iran war, Brent Crude oil prices have risen to around $115 per barrel, while diesel prices have touched $200 per barrel. So, the gap between the crude oil and diesel oil price has widened from $38 per barrel to around $90 per barrel, a big surge in the business of the OMCs and oil refiners, which nobody is talking about amid soaring crude oil prices.”
On how Reliance Industries is expected to benefit from this big rise in the crude oil and diesel price gap in the international market, the SEBI-registered expert said that $100 per barrel has become a new normal for the markets and RIL is a big exporter of diesel in the international market. He said that Reliance Industries' diesel and refined fuel export business has transformed significantly post-Russia-Ukraine war, shifting from capturing early arbitrage margins on discounted Russian crude to navigating shifting Western sanctions, US diplomatic engagements, and changing global trade routes. Following the outbreak of the Russia-Ukraine war in 2022, Reliance's twin refineries in Jamnagar (Gujarat) capitalised on heavily discounted Russian Urals crude, deferring maintenance to maximise production and exports of diesel, jet fuel, and gasoline to energy-starved international markets.
“The market is expecting the benefit of value unlocking for RIL, as it holds around one-third stake in Reliance Jio Platforms. So, this rally in the RIL shares can be attributed to the Jio Platforms IPO subscription opening,” Avinash Gorakshkar said.
On how one can connect Jio Platforms IPO with Reliance Industries' shares. Avinnash Gorakshkar said that even after value unlock from RIL, the balance sheets of these two companies would be connected due to RIL's strong two-thirds shareholding. Good financial performance would continue to be reflected in RIL's balance sheet.
Expecting this value unlock rally to continue further, Avinash Gorakshkar said, “The market is estimating around ₹350 to ₹500 per share rise in RIL shares due to the value unlock. However, much will depend upon the kind of listing Jio Platforms IPO receives.”
Divulging the Jio Platforms IPO listing price, Avinash Gorakshkar said, “The market is expecting Jio Platforms IPO listing price in the range of ₹1350 to ₹1400, depending upon the market mood. This premium is expected to be added to RIL shares. The Jio Platforms IPO price band is ₹1,065 to ₹1,119. So, this ₹1350 to ₹1400 Jio Platforms IPO listing price means ₹250 to ₹300 per share addition in Reliance shares in the short-term-medium term. However, by the end of this fiscal, RIL share price is expected to end between ₹1,550 and ₹1,700, depending upon the kind of market mood that remains in the last quarter of the current fiscal.”
Decoding the technical chart of Reliance shares, Mahesh M Ojha, VP — Research and Business Development at KC Securities, said, “Reliance Industries shares have a strong base formation at the ₹1,145. The stock has broken out above ₹1,200 and is now heading towards the short-term target of ₹1,265. Existing shareholders and fresh buyers can initiate coverage with a strict stop-loss at ₹1,145 for the targets of ₹1,265, ₹1,290 and ₹1,350 in the short-term horizon.”
Asit Manohar has nearly two decades of experience in the mainstream media. In this period, he has served esteemed media organisations like NDTV Profit, The Economic Times, and Zee Business. He has been working at LiveMint Digital since April 2021. During these two decades of journey in mainstream media, Asit has mainly covered external affairs, markets and personal finance. However, his earliest beats include railways, SME, MSME, and politics (Congress beat). Some of his features on political, economic, and foreign policy are documented in the parliamentary records. <br><br> While pursuing his MA (Mass Communication, Session 2004-06), Asit began his media career as a stringer at All India Radio in Varanasi. At AIR Varanasi, Asit worked with the Gyanvani, Yuvvani and Vividh Bharti teams. After working for nearly one year at AIR Varanasi, he shifted to print journalism and started working as a stringer for the HT Media Ltd, Varanasi. At HT Media Ltd in Varanasi, he covered the BHU beat. <br><br> Asit has also worked with some brokerage houses. He has worked with Religare Broking and India Infoline, where he assisted the research team in developing and executing trade strategies for intraday cash, F&O, and commodities. <br><br> Asit is a Gold Medalist in MA (Mass Communication) from BHU, Varanasi. He did his BSc. (Hons) in Mathematics from Magadh University, Bodh Gaya. Asit was a National Talent Scholarship holder during his senior secondary studies (1988-91).
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