The stock is Reliance. Here's why?
Reliance stock has been down and out stock for now fairly long time. I did cover the stock just few days back in Video Library. I would request you to go through that presentation if you have not already to get big picture idea of Reliance stock. Now lets talk near term - in last few days - Reliance has done something different and it's important to look at the stock again
Here's Reliance daily chart
As you can see in the chart - Reliance stock formed a small resistance around 940 and 200 dma which it broke decisively in last 6 trading sessions. The move has been sharp and vertical. It does indicate fresh interest in the stock. Now, when large caps move like this - they don't stop abruptly. Reliance is well positioned for trading rally to 1140 - - level which it has not breached now for almost 7 years now.
Reliance stock post this vertical move could have done two things -
1. Bullish Consolidation i.e. the stock trading sideways for few days before taking off towards target of 1140.
2. Pulled back to retest 200 dma/940 as support and then resuming uptrend
Now considering - Reliance stock has traded sideways for 3 days now - I am more inclined to believe that stock is doing the option 1 and it indicates strength and should be matter of time before stock resumes ST uptrend towards target of 1140. In markets, nothing is certain. At this time, we can only guess based on past history of such patterns.
At this point of time - Reliance at best is positioned for trading move to 1140 and that's why looks the best stock to take Nifty higher. Please do your own due diligence. This is just my reading of the situation.
Please share your comments on what you think of above stock observations
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers