Shares of Reliance Industries Ltd recorded a new 52-week low on Wednesday, losing more than 1%. The stock has fallen for the fifth consecutive session and lost 7% so far. Analysts believe that the stock has breached the crucial support level of ₹2,300, prompting worries about a potential future decline.
On Wednesday, the stock hit an intraday low of ₹2,240.60 and high of ₹2,298.30. On a year-to-date measure, the stock has slumped nearly 12%.
“From the past 81 weeks, stock is under the range of ₹2,767 to ₹2,240. From the past 5 trading sessions, the stock has cut its size by 7%. Stock is hovering around the lower band of consolidation and it has entered into the support band but buyers have not showcased their presence. Underlying tone for the stock is negative but ₹2,240 to ₹2,180 level is an important level for potential reversal,” said Kapil Shah, Technical Analyst, Emkay Global.
According to Ruchit Jain, lead research, 5paisa.com, ₹2,300-2,290 was the important support zone for the stock as it had managed to bounce from this zone twice in the recent past. However, prices have closed below the support and hence, “if we see a follow-up selling in the coming session, then there could be unwinding of long positions which could drag the stock towards ₹2,240/2,210”.
Jain recommends short term traders to avoid bottom fishing until this breakdown is proved to be a false breakdown.
Reliance Industries has reportedly been in a corrective phase for a considerable period of time and is currently hanging close to the critical zone of ₹2,300, according to Osho Krishan, senior analyst, technical & derivative research, Angel One Ltd. The market has historically reversed from the referenced zone, and the same is expected this time.
"As far as levels are concerned, ₹2,240-2,220 is likely to cushion the fall in the comparable period. However, any breach below that could disrupt the technical charts. While on the flip side, the initial resistance is placed around the bearish gap of 2,345-2,355, followed by the immediate swing high of 2,424 odd levels," added Krishan.