Reliance Communications is drowning in debt and now everyone is worried about the company's execution strategy when it comes to deleveraging and even decent operational performance. The company expects to cut down its debt by 75 percent through merger of MTS, Aircel and sales of mobile towers but market is not in mood of any more talk. CLSA and Merrill Lynch both have downgraded the stock. But what's even more fascinating: How the stock is positioned on the weekly chart -
As you can see in the chart above: Rcom is trading right at Horizontal Line of 47 and any breakdown here can create enormous panic among existing investors. There is lot of effort going on to hold the stock above 46 - look at the volume but if we go purely by fundamental chatter: it looks like stock is on for very tough time. Generally, when things are totally down and out - sometimes a small hint of turnaround and helping hand can create unbelievable rally. All that is required: Close watch because anything can happen.
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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