This is the first detailed analysis of a stock that we are publishing here, so we take the opportunity to debrief our analysis pattern and methodology. Our analysis will compromise of three steps:
A. Technical View of Stock
We have chosen Reliance industries as the first scrip, for a reason. This truly is a forgotten story. Behemoth of Indian giants, leader through Market Cap, and crown jewel of Indian scrips is today languishing, in terms of stock price performance. Lets follow our analysis process and dissect RIL using Technical and Fundamental tools:
Above is a monthly chart for RIL. For beginners, this means that the chart shows how the price moved over a period of several years, with each colored candle representing one month.
One look at the monthly chart, and we can see that Reliance Industries is well below its 2007 or 2011 highs. This in itself is not a good news. Or a bad news either. Value investors do not believe in purchasing a stock near its highs. As Buffett says, there needs to be a margin of safety. With the current RIL stock price languishing at Rs 800, you are well cushioned from the highs of 1600 and 1200 respectively.
Moving on to the short term technical view of RIL, now we will look at daily charts instead of Monthly to get a short term view:
The daily chart above shows, for starters, price of RIL stock movement for past few months and each candle being a day's price movement. In the short term technical view, the stock is indeed bearish, wherein 3 EMA (Exponential Moving Averages) is dipping below 15 EMA, indicating the short term bearish view.
Apologies, but allow me to add one more technical chart, before we move to fundamental analysis of RIL:
The above chart depicts the classic Double Bottom for RIL over a daily chart. This means that scrip is indeed seen its lows, and one can see the RSI(Relative Strength Indicator) moving upwards and creating a higher low, whereas the price hitting a lower low. This is not very clean, albeit a initial indicator that bad days might as well be over for RIL in medium term.
Thus we saw all three views technically:
1. RIL, undervalued technically price wise on a multi year view
2. RIL, being in short term bearish grip
3. RIL, having seen a double bottom in medium term, promises of better prices in days to come.
With the myriad of views across three timelines, fundamental analysis of this scrip will indeed help the investor in making a correct medium term or long term call for this scrip.
This post is now getting quite lengthy for my comfort, I will keep the fundamental analysis to the next post, which is coming up shortly. Hope you enjoyed this writeup.
A. Technical View of Stock
B. Fundamental View of Stock
C. News View - i.e. What are the upcoming activities for a company, macro and micro indicators and overall sentiment analysis for the Scrip.
StockFundoo Summary of the Stock and Future View is a judicious mix of above three type of Analysis, thus guiding investors in making the best possible call of the market for a given scrip.
StockFundoo Summary of the Stock and Future View is a judicious mix of above three type of Analysis, thus guiding investors in making the best possible call of the market for a given scrip.
We have chosen Reliance industries as the first scrip, for a reason. This truly is a forgotten story. Behemoth of Indian giants, leader through Market Cap, and crown jewel of Indian scrips is today languishing, in terms of stock price performance. Lets follow our analysis process and dissect RIL using Technical and Fundamental tools:
A. Technical View for RIL:
One look at the monthly chart, and we can see that Reliance Industries is well below its 2007 or 2011 highs. This in itself is not a good news. Or a bad news either. Value investors do not believe in purchasing a stock near its highs. As Buffett says, there needs to be a margin of safety. With the current RIL stock price languishing at Rs 800, you are well cushioned from the highs of 1600 and 1200 respectively.
Moving on to the short term technical view of RIL, now we will look at daily charts instead of Monthly to get a short term view:
The daily chart above shows, for starters, price of RIL stock movement for past few months and each candle being a day's price movement. In the short term technical view, the stock is indeed bearish, wherein 3 EMA (Exponential Moving Averages) is dipping below 15 EMA, indicating the short term bearish view.
Apologies, but allow me to add one more technical chart, before we move to fundamental analysis of RIL:
The above chart depicts the classic Double Bottom for RIL over a daily chart. This means that scrip is indeed seen its lows, and one can see the RSI(Relative Strength Indicator) moving upwards and creating a higher low, whereas the price hitting a lower low. This is not very clean, albeit a initial indicator that bad days might as well be over for RIL in medium term.
Thus we saw all three views technically:
1. RIL, undervalued technically price wise on a multi year view
2. RIL, being in short term bearish grip
3. RIL, having seen a double bottom in medium term, promises of better prices in days to come.
With the myriad of views across three timelines, fundamental analysis of this scrip will indeed help the investor in making a correct medium term or long term call for this scrip.
This post is now getting quite lengthy for my comfort, I will keep the fundamental analysis to the next post, which is coming up shortly. Hope you enjoyed this writeup.
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