RIL bonus issue: Reliance stock to outperform Nifty 50 in near-term? Here’s what JM’s technical analysis reveals

Shares of billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) is likely to outperform Nifty 50, domestic brokerage JM Financial said in a technical note on Tuesday, ahead of the oil-to-telecom conglomerate's meeting on its much-awaited bonus shares on September 5.

‘’Quarter to date, the large-cap stock has underperformed the Nifty 50 index by eight per cent. In comparison to NSE 200 weight, mutual funds are underweight in the stock,'' said the brokerage in its note.

Also Read: Reliance Industries AGM 2024: RIL to consider bonus shares, Jio-AI cloud to issue 100 GB free storage; 5 key highlights

RIL to outperform Nifty 50 soon? 

According to JM Financial's technical analysis, all major selling in the stock in the last 10 months has ended marginally below the 100-day EMA levels, which is currently placed at ~2,958 levels. 

The series has started with a cumulative future open interest of 48.7 million shares as against the last three series' average of 40 million shares. Most accumulation seems to be on the long side, suggesting bullish sentiments prevailing. 

According to the brokerage, the ratio of Reliance Industries over Nifty 50 (currently at 0.1205 levels) is trading closer to post-COVID-19 lows of 0.1159 levels. It has managed to find support in the range 0.1159-0.12 levels on multiple occasions in the past four years suggesting lower probability of a breakdown to happen. 

‘’On a four-year data window, the ratio is trading at 0.8 standard deviation below the mean levels of 0.1294. It is at its 15 percentiles,'' said JM Financials.

Also Read: Reliance AGM 2024: What is a bonus issue and how does it benefit shareholders? All you need to know

RIL board to consider issuing 1:1 bonus shares on September 5

RIL conducted its 47th annual general meeting (AGM) on August 29. The conglomerate announced several projects as part of its digital and artificial intelligence (AI)- led future growth plans and key corporate actions, such as a bonus issue of shares slated for the near term. Reliance Chairman Mukesh Ambani said the company would launch a suite of AI tools and boost its green energy manufacturing ecosystem.

India's largest company by market cap announced that its Board will convene on Thursday, September 5, 2024, to consider and recommend to the shareholders the approval of a bonus issue of shares in the ratio of 1:1.

Bonus shares are additional shares that a company issues to its existing shareholders without any additional cost, based on the number of shares that a shareholder already owns. They are distributed in a specific ratio, such as 1:1, which means one bonus share for every one share held.

Also Read: Reliance Industries AGM 2024: RIL share price rally fuels Sensex, Nifty 50 to hit fresh record highs

Ambani said Reliance's ongoing tech-driven transformation will propel the company into a new orbit of hyper-growth and multiply its value for years. The strategic adoption of deep tech and advanced manufacturing will propel Reliance to secure a place in the global top-30 league soon, Ambani said, promising that the future is far brighter than the past.

RIL Stock Price Trend

On Tuesday, shares of RIL opened at ₹3,041.65 and hit an intra day high of ₹3,045 against a 52-week high of ₹3,217.90, before settling 0.44 per cent lower at ₹3,019.60 apiece on the BSE. In the last one year, Reliance Industries has provided 25.1 per cent returns to investors against Nifty 50's 30.07 per cent.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.