This week, the Nifty Index after making highs of above 10400 is now consolidating around 10200. During this consolidation of market, IT sector seen some some buying interest from investors. I think in November series, there are very few chances that we see any breakout of Nifty at levels of 10500.
However, today’s post is on the topic of top most active group in stock market this week. It is Reliance Group where we have seen the large volume and value action in last few days.
What Should you do now in Reliance Group Stocks?
Reliance is one of the most know groups in india in which public believes a lot. But this week, when Reliance Communication lost more than Rs 1000 crore market capital in a single week, the faith of investors in Reliance Group sharply came down. With the ongoing selling in Reliance Communication, investors also sold large amount of shares of other ADAG companies.
Because of high selling pressure in rcom, we also see some selling pressure on recently listed companies of ADAG. Reliance home finance fell more than 30 percent to Rs 64, and Reliance Nippon loose more than 10 percent in this week.
However, i think Rcom which is now available at the cheapest valuations in both telecom sector and Reliance Group, really has some short-term opportunities. Company has already clarified why rcom has doesn’t made any payment to its bond holders. As per their clarification to exchanges, lenders had earlier approved rcom to avoid any interest payment till December 2018.
Now i think the main thing which is left for any big fear is that how rcom will generate significant amount of revenue after closing its 2G, 3G services. I think it is possible that we could see some more decrease in quarterly revenue number, maybe to around Rs 2000 crore in next few quarters. But if 2G and 3G is really not generating any profitable amount for company, then it’s ok to close these services. As we all know, 4G is the future of India, then why not focus only on 4G.
Another reasons for which we have seen selling pressure in rcom comprises pleading of large amount of equity shares, concerns over debt reduction plans and decreasing interest of potential investors towards Reliance communication.
Although, i think Rcom is available at a very good price for short-term high risk taking investors. Technically, i think the maximum downside which is currently open in stock is around Rs 8. But in upside, levels of around Rs 25 is freely open for rcom’s stock. Therefore, at present levels of Rs 12, rcom is a good bet for a period of 1 year.
Reliance Power, R Infrastructure, R Naval
In Reliance power, R Naval and R infrastructure, i think they all are available at a very reasonable rate for any buying. But due to decreasing goodwill of rcom, other ADAG group companies have also faced some selling pressure. However, in near term, if rcom regain its lost goodwill/confidence among investors in market, i think Rpower, RNaval and RInfra would also show some great appreciation in their stock prices.
In case of Reliance Capital, major business i.e AMC is now no more in Reliance Capital. Housing finance business has also been separately listed on exchanges. Thereafter, businesses that still remain in reliance capital are Insurance business, commercial finance and few other financial services. We have already seen more than 50 percent price depreciation from its 52 week highs. And now stock has came at that levels from where it had started its rally. Therefore, in this growing market, i think reliance capital still has good value to buy at current levels for good returns in long-term.
R Housing finance and R Nippon AMC
Newly Listed firms of Reliance Capital also faced a great selling pressure this week. However, now these two stocks have seen some recovery from their 52 week lows. Both of them have good businesses modal and also have number of opportunities in long-term. If the situation in ADAG get better in near term, then i think these two stocks would probably give a good return in next one year. And in long-term, i think these two are great options for holding in your portfolio.
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