Breakout in Reliance Industries

JC Parets
June 15, 2021

The market has a mind of its own. Who would've thought that Reliance Industries would break out on a messy market day?

If you've been in the market a while, then you know that Reliance can single-handedly decide the direction of the market. Such is the power of this stock!

So what do we have here? Well, after a considerable bounce over the past month and a half, Reliance has managed to breach an area of resistance. And we're here to talk about the implications of that.

We've been discussing the strength in the Energy sector for quite some time now.  So if Reliance can move the market, does it have the same impact on Energy? Of course, it does!

Let's take a look at Energy first. At last count, Reliance had a weight of 32.60% in the Energy index. Power Grid is a far second with 11.47%.

Click on chart to enlarge view.

As we can see from the chart above, Nifty Energy is currently trading near its overhead resistance on the daily chart. A strong move from Reliance could most definitely push it over the edge. In this case, being pushed over the edge would be great!

The level that we're tracking is 21,000. A move above this and we'll witness another strong move in Energy. A halt here, and we could be waiting a while.

Where is Reliance in the grand scheme of things?

Yesterday, the stock broke out above its immediate resistance of 2,200. that translates to a short-term target of 2,325 if these levels hold, with 2,200 acting as the risk management level.

The indicator too is supportive of the current move and looks good for a rally.

While that was the tactical view, what's in store for the stock over a slightly longer time frame?

Well, for that, we're gonna have to wait for another breakout. This time, above the level of 2,325. Only a move above 2,325 can take the price out of this current range-bound move. In the event of that breakout, the next target to track would then be 2,630. 2,325 would then act as the risk management level.

A little early to gauge the time factor of when that breakout will come through. So all we can do is follow our levels and wait for the move.

Breakouts in market giants like Reliance Industries are significant from a market move perspective. If Nifty 50 is making new highs, you'd want strong participation to come through in the leaders as well.

This is on the lines of breadth analysis and market participation. More participation leads to a well-rounded market rally.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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