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RIl stock: It has staged a breakout from a bullish ascending triangle (weekly charts) that formed over past eleven months, said Milan Vaishnav.
Reliance Industries (RIL) scaled its fresh record high after the company said its subsidiary has acquired a majority stake in genomic testing firm Strand Life Sciences Pvt Ltd for Rs 393 crore. The scrip was gtrading 1.69% higher at Rs 2,428.55 at around 2.57 pm (IST). Meanwhile, it hit an all-time high of Rs 2,479.85 during the day. Amid the ongoing rally in the counter, the market valuation of Reliance Industries climbed to a record Rs 15 lakh crore, becoming the first domestic company to attain this historic feat.
The acquisition by Reliance Strategic Business Ventures Ltd (RSBVL) is part of Reliance’s digital health initiatives.
“RSBVL, a wholly-owned subsidiary of Reliance Industries Limited (RIL), has acquired 2.28 crore equity shares of Rs 10 each of Strand Life Sciences Private Limited for a cash consideration of Rs 393 crore only,” it said. A further investment of up to Rs 160 crore is expected to be completed by March, 2023.
“The total investment will translate into about 80.3% of equity share capital in Strand on a fully diluted basis,” it said.
Strand was incorporated in India on October 6, 2000. It is a pioneer of genomic testing in India with bioinformatics software and clinical research solutions to healthcare providers, including clinicians, hospitals, medical devices manufacturers and pharmaceutical companies.
Should you invest now?
“Current breakout, with new lifetime highs on Reliance Industries which is driven by news flows can be a catchup play in this relentless bull market as this counter topped out in last September 2020 with a high of Rs 2369. However, technically speaking, as this breakout occurred after 12 months this counter should have a range breakout target of around Rs 2,900 over a period of time,” said Chartist Mazhar Mohammad, founder and chief market strategist at Chartview India.
He further added that the counter needs need to sustain above Rs 2,369 levels as failure to do so may whipsaw the current breakout. Moreover, in Monday’s trading session this counter registered a Shooting Star kind of formation with long upper shadow hinting profit booking at higher levels. Hence, more weakness should be expected if it closes below Rs 2,395. Hence, short term traders should either book profits or continue with a stop below Rs 2,395 levels on a closing basis for an immediate target of Rs 2,480.
On the other hand, Milan Vaishnav, CMT, MSTA, consulting technical analyst, Gemstone Equity Research and Advisory said, “Reliance has staged a breakout from a bullish ascending triangle (weekly charts) that formed over past eleven months. This has made the zone of Rs 2,300-2,325 a strong base for the stock. Going ahead, the classical price measurements set a target price of Rs 2,850 for this stock going ahead. A close below Rs 2,200 will negate this view.”