Reliance Industries shares turn oversold on charts, fall for fourth session; what's next?

Shares of Reliance Industries Ltd (RIL) have turned oversold on charts while trading near their 52-week low. The relative strength index (RSI) of RIL stock stands at 29.3, signaling it's trading in the oversold zone. The market heavyweight is down 23% compared to the 11.35% fall in benchmark Sensex in the last six months. RIL stock is looking weak in terms of technicals as it is trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

Global economic uncertainties, weak corporate earnings and persistent foreign institutional investor (FII) outflows are among the major factors behind the correction in RIL stock. 

In the current session, RIL shares fell nearly 1% lower at Rs 1,160 against the previous close of Rs 1171.10 on BSE. The stock closed lower for the fourth straight session. Market cap of the firm fell to Rs 15.70 lakh crore. Total 2.87 lakh shares of the firm changed hands amounting to a turnover of Rs 33.43 crore on BSE today. The stock hit a record high of Rs 1608.95 on July 8, 2024. 

The stock has a beta of 1.2, indicating that it has seen high volatility in a year.  

Jigar S Patel from Anand Rathi is bearish on the stock. "Reliance has broken below the long-standing Rs 1,200 support level in the previous session, a key threshold for its price stability. If the stock fails to close above Rs 1,200 on a weekly basis, it could signal a bearish range shift. This would establish Rs 1200 as a new resistance level, with the stock likely trading within a lower range of  Rs 1100-Rs 1200. Such a shift could indicate further weakness, prompting sellers to dominate while buyers may wait for confirmation before stepping in. A sustained move below Rs 1200 could increase downside pressure, making Rs 1100 the next crucial support to watch," said Patel. 

Ameya Ranadive, Chartered Market Technician, CFTe, Sr Technical Analyst, Stoxbox said, "RIL has witnessed a fresh breakdown at Rs 1,200 after three months of consolidation, signaling renewed bearish pressure. The price has slipped below key support levels, with the 50-day EMA sloping downward, reinforcing the weakening trend. The increasing slope of the ADX indicates strengthening downside momentum, while the RSI remains below 30, suggesting oversold conditions but lacking a clear reversal signal. The MACD continues to trade in the negative zone, with a widening histogram reflecting persistent bearish sentiment."

"A sustained move above these resistance zones above 1200, along with improving momentum indicators, would be necessary to signal any potential reversal. Until then, price action needs to be closely monitored for signs of stabilization before considering any directional bias," added Ranadive.