RIL stock in focus: What next after near 12% surge? Analyst decodes history

An analysis of RIL's 26-year share price data by SAMCO Securities shows that the stock has recorded an average gain of 55.3% in the next 1-year after rallying over 5% in a single trading session.

RIL share price has rallied on an average 55% in the next one year, after registering over 5% gain in a single day, says SAMCO Securities study.

Rex Cano Mumbai

Listen to This Article

Here's what RIL's share price history suggests

Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, analysed RIL's 26-year stock price data to identify possible stock behaviour after such a strong rally. According to the analysis, Sheth notes that RIL stock has rallied more than 5 per cent on 9 occasions in a single trading session. The analyst flags that the average 1-year forward return after such rallies stands at an astounding 55.3 per cent gain. The win rate in such scenarios is 100 per cent, meaning the stock has delivered a positive return over the next 1-year after rallying more than 5 per cent in a single day in the last 26 years. Apurva Sheth points out that RIL on Monday surged 11.6 per cent in a single session, accompanied by an extraordinary volume breakout. "RIL stock has decisively broken above a prolonged downward sloping trendline, suggesting that selling pressure may finally be giving way to fresh buying interest," explains Sheth. The current breakout comes at an interesting juncture, with several fundamental triggers potentially improving the investment narrative, the analyst adds. The biggest catalyst for RIL stock according to the analyst is the success of Jio Platforms IPO and its listing last week, which unlocks value through a separate market valuation of Reliance's digital business. The September quarter results have added further momentum. Reliance reported record consolidated EBITDA of ₹62,409 crore, up 23.9 per cent YoY, and record PAT of ₹29,550 crore, up 33.8 per cent. The O2C business delivered a particularly strong performance, with EBITDA rising 67.9 per cent, while Jio's EBITDA grew 16.6 per cent. The confluence of a technical breakout, exceptional volumes, improving earnings and value unlocking through Jio makes Reliance an interesting stock to watch, says Sheth. Historically, the best 1-year forward return was a 170.5 per cent rally in RIL stock following an over 5 per cent single-day surge on June 20, 2005. The next two best performances followed breakout rallies on February 22, 2017 and August 13, 2019, yielding gains of 88.3 per cent and 75.4 per cent, respectively, the study said. Only thrice out of the nine occasions, RIL stock delivered a single-digit return over the next year after a breakout. The least gain stood at 4.3 per cent after a breakout on September 10, 2020, stated the note from SAMCO Securities.