RIL shares turn weak in H2 of 2024 but price targets indicate recovery ahead

Shares of Reliance Industries Ltd (RIL) have turned negative in the second half of 2024. The large cap stock, which forms part of portfolio of a majority of retail investors has lost 12% in six months. In fact, it is down 20% from its record high of Rs 1608.95 on July 8, 2024. The market heavyweight is trading lower than all its short-term and long-term moving averages. 

The stock has been highly volatile with a beta of 1.2 in the last one year. 

Ameya Ranadive, Chartered Market Technician, CFTe, Sr Technical Analyst, StoxBox said, "Reliance Industries is currently trading at Rs 1,288, showing a 20% decline from its 52-week high. The stock has found robust support near the Rs 1,200 level, which aligns with the lower boundary of its upward-trending channel that has been intact since 2020. This zone has historically acted as a strong base, reaffirming its long-term bullish trajectory." 

"From a technical perspective, the Relative Strength Index (RSI) has recovered to 46 from oversold levels, indicating early signs of momentum building. A decisive breakout above the Rs 1,330 mark, which also coincides with its 50-day exponential moving average, could trigger stronger participation and lead to a rally. Once this resistance is breached, the stock is expected to move towards targets of Rs 1,380–1,450. At current levels, Reliance offers a compelling risk-reward ratio and presents a solid buy-on-dips opportunity. Investors can consider accumulating the stock with a stop-loss below ?1,200 to safeguard against downside risks. Sustained movement above ?1,330 could act as a key catalyst for further upside in the near term," added Ranadive. 

Motilal Oswal expects earnings outlook to remain robust for RIL’s key segments, with growth likely to be driven by Reliance Jio (more frequent tariff hikes, market share gains, and FWA ramp-up).

"Reliance Industries (RIL) has underperformed the broader benchmarks, Bharti and organized retail peers, over the past few years, despite similar or superior EBITDA growth. We believe RIL’s underperformance was driven by higher capex in Retail and RJio as well as a lack of FCF generation. However, we believe the capex has likely peaked and expect RIL to generate INR1t cumulative FCF over FY24-27. We believe the risk-reward is compelling as RIL is currently trading close to our bear case valuations (1:10 risk-reward skew)," said Motilal Oswal. The brokerage has a price target of Rs 1,580 on the stock. 

However, Manish Shah, a SEBI Registered Investment Advisor is bearish on the outlook of the stock. 

"Reliance is in an intermediate-term downtrend. There is a loss of upside momentum in the price. The rally since the low of Rs 1212 seems to be a dead cat bounce. The price action suggests underlying weakness. There is a possibility that price can again drop to Rs 1200 and below that to Rs 1150 over the next couple of weeks. Major support is around Rs 1130-1150 area. Investors should adapt wait and watch mode in Reliance for the time being," said Shah.

In the current session, the market heavyweight fell 1% to Rs 1,281.85 on BSE. The company's market cap slipped to Rs 17.34 lakh crore on BSE today. Total 3.35 lakh shares of the firm changed hands amounting to a turnover of Rs 43.16 crore on BSE.