By At 11:19 AM on September 11, Reliance Power shares were trading at ₹30.62, reflecting a gain of 1.96% from the previous closing price. This rise came as the broader market saw moderate gains, with the Sensex trading at ₹82,029.59, up by 0.13%.
The stock’s performance has caught the attention of market participants, given the ongoing volatility in the energy sector.
The intraday movement of Reliance Power indicates a degree of fluctuation, with the stock hitting a high of ₹30.65 and a low of ₹29.91 in the morning session. While the price increase is notable, the stock’s activity suggests that investors are cautiously optimistic, with the price staying within a tight range during the day.
On the technical front, Reliance Power is trading above its 5-day, 50-day, 100-day, and 300-day Simple Moving Averages (SMAs), which generally signals positive momentum in the stock. However, the stock remains below its 10-day and 20-day SMAs, indicating that there could be some short-term resistance.
The 5-day SMA for the stock stands at ₹30.28, just slightly below its current trading price, while the 10-day and 20-day SMAs are at ₹30.72 and ₹31.84, respectively. The longer-term SMAs, such as the 50-day at ₹30.41 and the 100-day at ₹29.02, suggest stronger support levels, with the 300-day SMA at ₹27.24 indicating a broader upward trend over a longer period.
These technical indicators suggest that while the stock is experiencing some short-term challenges, it remains on solid footing in the longer term. The key pivot levels for the stock show resistance at ₹30.58, ₹31.13, and ₹31.58, while the stock has support at ₹29.58, ₹29.13, and ₹28.58.
The current trading price being slightly above the first resistance level indicates that the stock is facing some resistance but has the potential to move higher if it breaks through the next resistance points.
However, the volume traded on the NSE and BSE was down 49.45% by 11 AM compared to the previous trading session. This lower volume is an important factor to consider, as trading volume is often used as a key indicator of the sustainability of a price move.
When a stock moves up on lower volume, it can suggest that the price increase may not be supported by strong buying activity, potentially indicating a future reversal. In contrast, when a stock rises on higher volume, it often points to a more sustainable uptrend.
The volume decline paired with the price increase could signal that while the stock is moving higher, the momentum may not be as strong as it appears on the surface. This is further supported by the technical analysis, which shows the stock trading below its 10-day and 20-day SMAs, indicating that short-term resistance levels could cap further gains unless there is a significant increase in volume.
Fundamentally, Reliance Power is facing challenges. The company’s Return on Equity (ROE) is currently at -19.32%, which reflects a negative return for shareholders. This negative ROE is a concern for investors looking for profitability, as it indicates that the company is not generating sufficient income from its equity investments.
The negative ROE could also affect investor sentiment, as it suggests that Reliance Power may face difficulties in turning around its performance in the near future.
From an institutional perspective, the company’s shareholding pattern as of the June quarter shows a promoter holding of 23.24%, which provides some stability.
Mutual funds hold 2.67% of the company’s stock, while FIIs have reduced their holding from 7.89% in the March quarter to 7.59% in the June quarter. The slight decline in FII holding could be interpreted as a signal of caution from foreign investors, particularly in light of the company’s weak fundamentals.
The energy sector as a whole has seen mixed performance today. While Reliance Power shares are up, some of its peers, such as Jaiprakash Power Ventures and KPI Green Energy, have witnessed declines.
Meanwhile, other peers like Waaree Renewable Technologies and Nava have seen positive movement. This divergence within the sector suggests that stock-specific factors are at play, with individual companies reacting to their own unique circumstances rather than broader market trends.
