RIL Biggest Intraday Gains After 39 Months

Reliance Industries (RIL), the big boy on D-Street, after a long time posted the biggest intraday gains in today’s trade. Shares of Reliance Industries zoomed the day higher and closed up at 5.71 per cent to Rs 785.30. Well this was RIL’s biggest intraday gains ever since 18^th May 2009, which is almost 39 months ago when the shares of RIL had shot up 21.09 per cent. To distinctly recollect, that day was considered as Golden Monday and market had a 20 per cent upper circuit as the Congress led UPA had a massive win with the majority to form a government without the support of left.

Well it is but obvious that when RIL closed higher broader market is bound to show some good strength and close on a positive note. While Indian broader market also closed higher 1.25 per cent. This is because RIL is one the stock having highest weight of around 9.59 per cent of the Sensex which is then followed by ITC which is to the nearest. Also RIL has the largest Market Capitalization of around Rs 257150 crore.

The shares of the RIL rallied today, after the media reports which said that benchmark Singapore gross refining margin (GRM) have strengthened from the second week of July 2012 to average at USD 8 a barrel from USD 6.7 a barrel in the quarter ended June 2012.  This further raised hope that RIL GRM’s for the second quarter may see improvement as historically it has always posted some premium against the Singapore GRM’s.

Further the leading business Newspaper, Economic times reported that company agreed to share KG-D6 accounts with the CAG under the terms of the production sharing contract (PSC), meeting a key demand of Oil Minister Jaipal Reddy ahead of a crucial meeting of the block's management committee.

Volumes also spiked up five fold in today’s trade. Total Traded quantity (TTQ) stood at 14.52 lakh against 2 week average quantity of around 2.76 lakh shares. A spike in volume coupled with  rise in price is usually considered  bullish for the stock. However investors should further note that the buyback of RIL shares are currently going on and RIL has set the maximum buyback price of Rs 870. And this could be the potential cap for the stock.

We at Dalal Street Investment Journal believe that every rise in share price should be used for profit booking as we believe the RIL would still lag the market. We believe the company is still facing various headwinds and it would take some time and needs to prove significantly to regain the Investors confidence.