Reliance Capital - Capitalize on It

Reliance Capital is a Company of Anil Dhirubhai Ambani Group. It is a highly momentum stock and a very good script for trading. As the company has received the approval from the Reserve Bank of India (RBI) to set up an overseas subsidiary for international operations, it has been a good script to hold in our portfolio. The company has also filed an application with the National Housing Board to form a housing finance subsidiary.

FUNDAMENTAL ANALYSIS:-
Company with a market cap of 31500 crores and P/E as good as 30.80 and an outstanding EPS 41.75. Q1 result was outstanding as the company has posted a net profit of Rs3.43bn in the quarter ended June 30, 2008 compared to Rs3.25bn in the same quarter last year. Total income also increased by 15.44 bn. Under Asset management business net profit was up 67% to Rs330mn and a huge gain of 173% in its new Life Insurance Business. The company is expanding new business in housing finance also.

TECHNICAL ANALYSIS:-
The stock saw a bottom of 850 Rs on the fear of increased inflation and rising interest. Then it corrected hugely and now trading above its 50 sma. The stock has been at 2925 and then corrected sharply falling about 71%. Now after the technical correction it holds a sustainable support at 1125-1150. Positional traders may find this level a very good level for entering.

ADVICE TO INVESTORS:-
Based on the above analysis it is believed that the stock holds strong support 1125-1150 Rs. as it is a momentum stock it corrects sharply both upside and downside. But I think for a short term 1500 should be the target aimed.
) Short term – 1500-1550 Rs. for positional traders for for entering 1125-1150.
ii) Medium term – 1840-1900 Rs. for investors
iii) Long Term – 2160-2200 Rs. for investors.

Note: - All above views are mine and before investing investors should apply their con sense and do it at their own risk.

HAPPY INVESTING