RIL stock price chart check: Why RIL is a good buy on pullback stocks after 10% drop in 3 months
Short-term traders may look to buy the stock down towards Rs 2,300 for a possible target of Rs 2,600 over the next three months, experts suggest.
The stock fell from Rs 2,618 recorded on August 26 to Rs 2,345 (intraday low) on September 28, translating into a fall of more than 10%.
The price action suggests that the bears have kept control of the index heavyweight. It has fallen around 6% in one week and is now trading below most of the crucial short and long-term moving averages.
History suggests that the stock has also found buy support near the Rs 2,300 levels in the past. It is experiencing buying demand for the third time since May 2022.
The relative strength index (RSI) is at 31.7. An RSI below 30 is considered oversold and above 70 is considered overbought, according to data from Trendlyne.
Reliance Industries’ share price is seeing a bid to buy from the key support zone of Rs 2,300 to 2,370 for the third time since May 2022, a report said.
“We expect the stock to experience a gradual pullback from the current oversold territory, providing a fresh entry opportunity with a favorable risk-reward setup,” said Dharmesh Shah, Chief Technical Officer, ICICI Securities.
“The key support area of Rs 2,300 to 2,370 is a confluence of the rising 100-week SMA (currently at Rs 2,310) and the rising demand line joining major lows since January 2021, making it a crucial support area,” he said.
The key point to highlight is that over the past 21 weeks, it has only retraced 61.8% of its previous 8-week rally (Rs 2,180-2,856). A shallow retracement signals a positive price structure and a higher base formation.
“The weekly Stochastic is placed in extreme oversold territory with a reading of 8 around its previous major lows signaling a likely technical pullback in the coming weeks,” Shah suggests.
He recommends traders to go long for a target of Rs 2,615 in the coming weeks, and a stop loss can be placed below Rs 2,250.
(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)