Reliance Industries Share Price is on the Cusp of a Breakout

Summary:
• Reliance Industries share price continued its remarkable comeback as it surged to the highest level since June 10.

Reliance Industries share price continued its remarkable comeback as it surged to the highest level since June 10. The shares have rallied by over 18% from the lowest point in September and by 16% this year. As a result, Mukesh Ambani has seen his net worth soar by over $3.9 billion this year to $93.9 billion. This growth makes him the 8th richest person in the world.

India growth

Reliance Industries is one of the biggest companies in India. It leads in terms of market capitalisation, which stands at over $225 billion. The firm has a presence in most parts of the Indian economy, where it operates companies in the textiles, energy, retail, payments, and communications.

Reliance has benefited from the ongoing recovery of the Indian economy. Its energy companies have become extremely profitable since they are buying cheap Russian oil and gas and selling them at a huge markup internationally. 

Reliance is also growing because of its Jio business. A key growth engine is Jio Payments, a product that is going head-to-head with Paytm, the embattled fintech company. Its telecommunication business is also doing well as Jio has a 52.3% market share in the industry. Airtel, its biggest competitor, has a market share of 27%. 

A key concern for Reliance and Adani is that their total debt have been growing rapidly in the past few months. Reliance has a net debt of about ₹57,655 crore, a significant increase from ₹34,815 crore it had in March. Still, Reliance has managed its debt better than Adani, which has borrowed heavily to finance acquisitions. In a note, Fitch wrote:

“We expect RIL’s net leverage to remain at close to 1x in the medium term, well below the negative rating sensitivity of 1.5x for its Local-Currency IDR, even as we expect RIL’s capex to remain high at around INR1.2 trillion and peak at INR 1.3 trillion in FY24.”

Another catalyst for Reliance Industries share price is the retreat of Amazon in the country. It announced that it was shutting its wholesale distribution this week. Amazon was seen as a major contender of the retail sector in India. Meanwhile, Reliance has placed a bid for Future Retail, a debt-ridden retailer.

Reliance Industries share price forecast

The daily chart shows that the Reliance stock price has made a strong recovery in the past few days. It moved above the important resistance at 2,676, which was the highest level on August 17. The stock has risen above all moving averages while the MACD has continued rising. 

It also formed an inverted head and shoulders pattern. Therefore, the stock will likely continue rising as buyers target the key resistance at 2,811, which was the highest point on June 3. A drop below the support at 2,675 will invalidate the bullish view.