Reliance share price jumps 2% on THIS acquisition buzz. More upside possible?
Reliance Industries shares rose almost 2% on the BSE following the announcement that its subsidiary had acquired a 21% stake in Wavetech Helium, Inc. for $12 million.
Reliance share price: Shares of oil-to-telecom-to-retail conglomerate Reliance Industries jumped over 2 per cent in intraday trade on BSE on Friday, November 29, a day after the company announced its wholly-owned subsidiary acquired a 21 per cent stake in the US-based Wavetech Helium, Inc. for $12 million. According to the company, the acquisition is part of its strategy to expand its exploration and production business in low-carbon solutions.
The stock opened at ₹1,280 against its previous close of ₹1,271.35 and rose 2.2 per cent to the level of ₹1,299.30 on the BSE. Eventually, the stock closed 1.66 per cent higher at ₹1,292.45.
"Reliance Finance and Investments USA LLC, a step-down wholly owned subsidiary of the company, has on November 27, 2024, entered into a stock purchase agreement with Wavetech Helium, Inc. and subscribed to a 21 per cent stake of Wavetech Helium for an aggregate consideration of $12 million," the company said in an exchange filing on November 28.
"Wavetech Helium was incorporated on July 2, 2021, in the United States and started its commercial operations in 2024. It is a US helium gas exploration and production company engaged in the acquisition, exploration, and development of properties to produce helium gas from underground reservoirs," said the company.
Reliance share price trend
Shares of India's largest company by market capitalisation have experienced modest gains over the past year. While the Sensex has risen 19 per cent, Reliance shares have gained just about 8 per cent as of the close on November 29.
On a monthly basis, the stock has been in the red since September. It declined by 2 per cent in September and 10 per cent in October. In November, the stock fell 3 per cent.
It hit a 52-week high of ₹1,608.95 on July 8 this year and a 52-week low of ₹1,185.63 on November 30 last year.
More upside possible?
Snapping the losing streak of the last three consecutive weeks, the stock saw healthy gains of about 2 per cent for the week ended November 29 amid a fresh escalation in tensions between Russia and Ukraine, which is expected to benefit oil-producing companies, including Reliance.
Experts believe soaring crude oil prices due to geopolitical tension may benefit Reliance Industries' margin.
Recently, foreign brokerage CLSA maintained its ‘outperform’ rating on Reliance stock, with a target price of ₹1,650, as it said the company’s new energy business, worth $40 billion, is being ignored by the market.
Reliance aims to set up a fully integrated 20GW solar gigafactory by 2026/2027 and launch cell-to-module production in the next three to four months.
According to CLSA’s estimates, the solar business could have earnings before interest, tax, depreciation, and amortisation (EBITDA) of $1.7 billion over the next four to five years and a value of over $30 billion, which is at a discount to the replacement cost valuation of recently listed Indian solar PV manufacturers.
Technical experts also appear positive about the stock for the short term.
According to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, traders can consider initiating long positions in the stock in the ₹1,265-1,290 range, placing a protective stop-loss below ₹1,199 to manage risk. "The anticipated upside target for this trade is around ₹1,400," said Patel.
Patel pointed out that Reliance has been following a textbook Elliott Wave 5-wave structure on the daily chart since March 2023. This impulsive rally came to a decisive conclusion in July 2024, marking the end of the fifth wave and initiating a corrective ABC phase.
He said such corrections are typical after the completion of a five-wave cycle and often retrace to significant Fibonacci levels.
"Currently, the stock has reversed from ₹1,220-1,240 range, which aligns with the 61.8 per cent Fibonacci retracement level of the entire five-wave structure. This level is important as it typically serves as a strong support during corrective phases, indicating the potential for base formation. Moreover, these levels coincide with the completion of a bullish Crab harmonic pattern, further strengthening the case for a reversal," said Patel.
Pravesh Gour, Senior Technical Analyst at Swastika Investmart, underscored that on the upside, the first resistance for the stock is at ₹1,300. If this level is breached, the next resistance zone lies around ₹1,400, aligning with the 100-day exponential moving average (EMA). On the downside, a strong support level is placed at ₹1,220.
Mandar Bhojane, an equity research analyst at Choice Broking, said the stock recently reversed from a major support level at ₹1,220 and has started forming higher lows, suggesting the possibility of a trend reversal. The immediate resistance is near ₹1,300, which is a potential breakout level for the current range.
"The stock is trading below its 200-day exponential moving average (EMA), reinforcing the prevailing bearish sentiment. The Relative Strength Index (RSI) stands at 47, indicating oversold conditions. This suggests that the selling momentum might be overextended, increasing the likelihood of a short-term bounce or reversal," said Bhojane.
"If Reliance sustains above ₹1,300 and confirms a reversal pattern, it could present an attractive buying opportunity. A long position with a target range of ₹1,370 to ₹1,400 can be considered. To manage risk effectively, a stop loss at ₹1,220 is advisable to safeguard against potential downside," Bhojane said.
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