Chart Check: Why RIL is a good buy on dip stock after 10% fall in a month

Short-term traders can look to buy the stock on dips towards Rs 2,300 for a possible target of Rs 2,600 in the next 3-4 weeks, suggest experts.

The stock fell from Rs 2,618 recorded on August 26 to Rs 2,345 (intraday low) on September 28 which translates into a fall of more than 10 per cent.

The price action suggests that bears remained in control of the index heavyweight. It fell by about 6 per cent in a week and is now trading below most of the crucial short- and long-term moving averages.

History suggests that the stock has found buying support near Rs 2,300 levels in the past as well. It is witnessing buying demand for the third time since May 2022.

The relative strength index (RSI) is at 31.7. RSI below 30 is considered oversold and above 70 is considered overbought, Trendlyne data showed.

ET CONTRIBUTORS

The share price of Reliance Industries is witnessing buying demand from the key support area of Rs 2,300-2,370 for the third time since May 2022, said in a report.

“We expect the stock to witness a gradual pullback from the current oversold territory thus offering fresh entry opportunity with a favourable risk-reward set up,” Dharmesh Shah, Head Technical, ICICI Securities, said.

“Key support area of Rs 2,300-2,370 is a confluence of the rising 100 weeks SMA (currently at Rs 2,310) and the rising demand line joining major lows since January 2021 making it a crucial support zone,” he said.

Key point to highlight is that in the past 21 weeks it has retraced just 61.8% of its preceding 8 weeks rally (Rs 2,180-2,856). A shallow retracement signals a positive price structure and a higher base formation.

“Weekly stochastic is placed at an extreme oversold territory with a reading of 8 around its previous major lows signalling a technical pullback likely in the coming weeks,” suggests Shah.

He recommends traders to go long for a target of Rs 2,615 in the coming weeks, and a stop loss can be placed below Rs 2,250.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)