Reliance Power shares jump 16% today amid heavy volumes; here's why

Shares of Reliance Power Ltd rose sharply in Monday's trade amid heavy volumes. The stock jumped 16.19 per cent to hit a day high of Rs 16.22 over its previous close of Rs 13.96. Around 5.79 crore shares changed hands today on BSE, which was more than three times compared to the two-week average volume of 1.87 crore shares. Turnover on the counter stood at Rs 88.16 crore, commanding a market capitalisation (m-cap) of Rs 6,021.15 crore.

The sharp upward move in the share price came after the company witnessed at least six bulk deals last week. According to NSE data, QE Securities purchased 21,013,064 shares on June 7 at an average price of Rs 14.56. And, it sold 22,501,864 shares on the same day at an average price of Rs 14.58.

In a similar way, HRTI Pvt Ltd bought 22,456,185 shares for Rs 14.59 apiece and sold 22,115,159 shares at an average price of Rs 14.63. Also, Citadel Securities India Markets Pvt Ltd 9,844,015 shares on June 8 at an average price of Rs 14.44 and offloaded 19,516,370 shares at Rs 14.54 apiece.

Prior to this, the scrip was in focus last month after a report claimed that the company has apparently made a Rs 1,200 crore one-time settlement (OTS) offer to the lenders of its subsidiary, Vidarbha Industries Power Ltd (VIPL), for settling the debt. Following that, stock exchanges BSE and NSE sought clarification from the company.

In response, RPower stated, "We would like to inform you that there is no event or information which requires disclosure and accordingly, the same is factually incorrect." Appropriate disclosures would be declared promptly, in accordance with applicable regulations, as and when any disclosable event occurs, the company added.

On the technical front, Reliance Power was last seen trading higher than the 5-day, 20-, 50-, 100- and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 72.20. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 7.96. It has a price-to-book (P/B) value of 0.59.

The stock has a one-year beta of 1.08, indicating high volatility. Support on the counter could be seen at Rs 14, followed by Rs 13.80, Rs 13.50 and Rs 11 levels.

Reliance Power has lately witnessed some buying traction, which led the counter to surpass the 200-SMA (Simple Moving Average) on the daily charts. At the current juncture, the stock is placed near its sturdy hurdle of the Rs 17-18 zone, and a decisive breakthrough could only trigger the next leg of rally. On the downside, the immediate support is placed around Rs 14-13.80, breaching which it may plunge towards Rs 13-odd levels," said Osho Krishan, Senior Analyst - Technical & Derivative Research at Angel One.  

"Reliance Power is bullish but also overbought on the daily charts with the next resistance at Rs 17.70. A daily close below the support of Rs 13.50 could lead to Rs 14.15 could lead to a target of Rs 11.30 in the near term," said AR Ramachandran from Tips2trades.

"Reliance Power technically looks fantastic for a target of Rs 20. It is critical to close and sustain over Rs 20 levels for larger targets. However, it has solid support at Rs 11, therefore use these levels as a stop loss," said Vaibhav Kaushik, Research Analyst at GCL Broking.

Meanwhile, Indian equity benchmarks traded higher in late deals today, led by gains in technology, metals, state-owned lenders and energy stocks.

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