RELIANCE AFTER RIGHT ISSUE AND FACEBOOK DEAL

3 May 2020

Reliance Industries Limited: RELIANCE

After the Q4 Results announcement of Reliance JOI Business is doing very well, Retail Business is Average and Petro-chemical Business is not able to perform due to Crude oil Price fluctuation. Reliance has announced to debt free company by 2021 and moving aggressively towards the plan. In the year 2020 Reliance is going to raised money through various ways:

No.1: Stake sale of 9.99% in JOI to Facebook and raised close to Rs.43000 Cr.
No.2: Now through right issue they are raising Rs.55000 Cr.
No 3: They are in talk with Stake sale of 20% in Reliance Industries to Saudi Aramco

This all activity in the company will have a positive impact on share prices in the long term. Also currently Right issue will have short term impact on share prices. We are going to analyse both short term as well as long term price moves of Reliance.

Short Term Price Moves:
Right issue is announced at Rs.1257 Per share for the existing share holders and for every 15 share they offer 1 share. Generally when any company announce right issues at discount to the last closing prices we see that price tend to be get closer to the right issue prices, So for the coming week we expect some correction in the stock. We suggest to remain short on Reliance will prices sustains below 1500 levels. For the next week we expect prices to drop to 1350 levels.

Long Term Price Moves:
We have seen sharp up move in the month of April 2020, So we can expect some profit booking in the counter and buying by the investors should be done only at lower levels of 1000-900, here at 1450 levels risk and reward ratio is not favorable.