Reliance Power shares rallied over 49% in 11 sessions; is more steam left?

Shares of Reliance Power Ltd extended their gains for the 11th consecutive session on Thursday. The stock jumped 5 per cent to hit a fresh 52-week high of Rs 44.16. At this price, it has surged 49.34 per cent in 11 trading days.

Bourses BSE and NSE have put the securities of RPower under the short-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

The Anil Ambani-led company recently announced a preferential issue of 46.2 crore equity shares worth Rs 1,524.60 crore at a price of Rs 33 per share. The issue is proposed to be made to promoter Reliance Infrastructure Ltd and non-promoter entities Authum Investment and Sanatan Financial Advisory Services Private Ltd (Sanjay Kothari and Meenakshi Sanjay Kothari).

Technical analysts largely remained positive on the counter. With that being said, an analyst suggested booking profits at current levels.

"RPower has potential to hit an upside target of Rs 50 in the near term. Keep stop loss placed at Rs 40 for this trade," said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

"Support will be at Rs 42 and resistance at Rs 45. A decisive close above Rs 45 level may trigger a further upside towards Rs 48. The expected trading range will be between Rs 40 and Rs 48 for the short term," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi.

"Reliance Power stock price is bullish but overbought on daily charts with next resistance at Rs 48. Investors should book profits at current levels as a daily close below support of Rs 39 could lead to a downward target of Rs 33 in the near term," said Sebi-registered research analyst AR Ramachandran.

The counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The scrip's 14-day relative strength index (RSI) came at 83.10. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the company's stock has a price-to-equity (P/E) ratio of 247.88 against a price-to-book (P/B) value of 1.80. Earnings per share (EPS) stood at 0.17 with a return on equity (RoE) of 0.73.