Talking about Reliance Industries, everybody is talking about it taking out those levels of 1100 and Goldman Sachs saying that 1250 is also achievable. What is your view?
That could well be but we know that Reliance is not doing it. It has the potential theoretically. What is the trader to do if I buy now and Reliance actually does what it has been doing for the last few months - does not do anything. In such a case the trade is stuck in a range. We have seen 1100 as a significant resistance now for almost 2 years.
If 1100 is taken out, it means I am going to buy about 12% after the current price. That is okay that is the point at which buying should be done. So while it is possible for Reliance to move up and down, the decisive move will come only above 1100. That is the trade I would take.
Raising gas output will result in Rs 3 increase in RIL EPS: Deven Choksey, KR Choksey Securities
What is the call on Reliance Industries on the back of the news that it is increasing its output after the completion of four additional wells?
The number expected was 80 mmscmd and the news says it is 67 mmscmd. So, probably it is to a certain extent below expectation. Also, assuming that going forward, it will probably increase further, then we will have to see whether it is going to be at an incremental price or it the prefixed price of $4.2 per mmBtu. So, we need clarity on these two issues. Nonetheless, the raise in output will have an incremental impact on the business because it would probably have a slightly better upside. It probably would result into about Rs 3 increase in earnings per shares if the full year output is increased to 67 mmscmd vis-à-vis 52 or 55 mmscmd of last year.
Now that RIL has revised the output upwards, this is still not a very raw deal?
It is not a raw deal and it is probably a step in the right direction that RIL's output is increasing. If it is 67 mmscmd, and if it continues for full 12 months, it will have an incremental impact on EPS by Rs 3 per share vis-à-vis what one would have imagined at 55 mmscmd. One would have to look for two things: how much incremental production is happening over a period of time from this well and whether it would be available at an incremental price. If that happens, then definitely the situation remains extremely positive thereafter. As of now, it is positive but it could have been little bit better had it been 80 mmscmd.
Reliance Industries will be much higher: Sushil Choksey, Indus Equity Advisors
In light of the earnings upgrade, how would you rate the stock now and would you upgrade the target price as well on Reliance Industries?
If you look at Reliance's stock performance in last 6 months, since the time Reliance was not able to raise the gas prices, people were getting negative on the stock. But Reliance is firing on all cylinders and all other businesses are doing good. Fuel prices are already at $4-4.5 a gallon in US and they have been selling to the West. So their refining margins in the 4th quarter and going into the next year are going to be much higher than what they have been indicating in last 3-4 quarters.
Polyester has got the maximum mileage in terms of growth and potential and profitability on a historical basis. So Reliance should perform the best in next 6 months as far as polyester fibre intermediates are concerned. The domestic economy is stable whether it is 8%, 9%, all the petrochemical plastics or anything consumption pattern and consumer durables is likely to do well.
So Reliance going forward - not only in the 4th quarter but the first and the second quarter - would surprise most of the analysts based on the numbers today which have been forecasted.
Would you endorse that Reliance earlier was a sell on a rise stock and now it is a buy on every decline stock?
Basically if you look at it, the whole world is negative on India with factors related to inflation in oil. If you relate, Reliance is one of the key gainers in the environment when oil is high specifically because of the exports to the West on refining products. All the other products are complimenting the current situation of soft commodity inflation. If market is flat, definitely Reliance in next 18 months will be much higher than where it is. By March 2012, I would not be surprised if we hit 1500.
Long-term outlook on Reliance Industries bullish: Rajat Bose
Talking about Reliance Industries, from 999 to 1000 it's a difference of Rs 1 but that changes the entire stacking order for a stock, isn't it?
Yes, you are right, 1000 generally acts either a psychological support or it acts as a psychological resistance. Right from May 18, 2009 when Reliance hit a top of 1267, we have seen many positive news and sometimes negative news if you review the last 22 months.
Reliance remains range bound. So I am not too over enthusiastic although my long-term outlook still remains bullish on that and that 1250 target given by Goldman Sachs is achievable over the long term.
But in the short-term, yesterday there was a very good run up in Bharti and Infosys but when you analyse the F&O statistics, you found huge amount of short covering in those stocks. So this rally could well be short covering. It remains to be seen how much of it is investment buying. If that were to be there, then it would sustain above 1000 levels. Initially the resistance would be a 1022 but till such time it crosses 1044 to 1050 decisively, we should not be too gung-ho about Reliance getting into 67 mcmd
What is your technical advice to investors on Reliance Industries, should they be selling Reliance Industries, should they be exiting Reliance Industries?
If 1000 call for Reliance and your open interest in the March contract is not increasing in the last 15 minutes, then it should be a sell.