Reliance Industries share price fell over 1.5 per cent to Rs 2,245 apiece on Monday, after RIL’s retail arm Reliance Retail took over the operations of at least 200 stores of Future Retail. On the other hand, Future Retail share price soared 8.4 per cent to Rs 46.95 apiece on BSE. In comparison, BSE Sensex was down half a per cent or 290 points to 55,569. Analysts say that RIL stock price is testing a multi-month extended support trend line. “Even though the stock is below all the three key moving averages, it is very much likely that this support that exists in the range of 2210-2260 is defended,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com.
Vaishnav also said that the news-driven move does not last much, therefore, investors should try and latch on to this price and buy in this stock with a medium term horizon. In the traded volume terms, a total of 1.19 lakh shares exchanged hands on BSE, while 17.96 lakh shares were traded on NSE so far in the trade on Monday.
Likhita Chepa, Senior Research Analyst at CapitalVia Global Research said that Mukesh Ambani’s Reliance has already been trading near to its support levels and has lesser impact of take over on its price. Future group has defaulted on its loan servicing and the account of the company has been classified as NPA by the banks and Reliance will have to take care of the loans. “Future group’s losses have also been increasing constantly at the store levels which will be another concern for the company. This will have a negative impact on the profitability and margins for Reliance in the near future,” Chepa told FinancialExpress.com.
In August 2020, Kishore Biyani’s Future Retail proposed to sell its retail, wholesale and logistics arms that included businesses including Fashion at Big Bazaar, Koryo, Foodhall and Easyday to Reliance for Rs 24,713 crore. Technical analysts suggest that despite a dip in Reliance Industries stock price, investors must look to accumulate the stock from current levels on the back of strong telecom and retail performance expected in the coming quarters. “Technically, 2240 remains strong support, with 2400 acting as a major resistance,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com.
Future has more than 1,700 outlets, including the popular Big Bazaar stories, and has not made lease payments for some of its outlets. Future Retail Ltd in a stock exchange filing said, “The shareholders are aware that FRL is going through an acute financial crisis. The company has defaulted on its loan servicing and as already informed, the account of the company has been classified as NPA by the banks.” Future Retail said it is finding it difficult to finance the working capital needs. “The ongoing litigation initiated by Amazon in October 2020, and which is continuing for the last one and a half years, has created serious impediments in the implementation of the Scheme (Reliance takeover), resulting in severe adverse impact on the working of the company,” it said.
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