Reliance Capital is another flagship company of ADAG group, the company is involved in insurance and broking businesses mainly. The history of this company tell us it was listed on NSE on 29 November 1995, after the listing the company has become one the favorite stocks of the FII as they had bought huge stake in the company at the time of bull run that began on 2005 in the stock taking the stock from Rs.185 per share to Rs.2900 per share in 2008, one can see how huge rally was witnessed in this stock. Since the recession of 2008 there wasn’t any big move in the stock price of the company. So looking at this quarter result we see that the growth of company has slow down, keeping this in mind we will be advising investors to stay away from this stock in short term and for long term traders our advice is to go long near 510 level for long term targets as 710 and then 980 zones. It is also advisable to place the stop loss below the 480 level, so this is and excellent call with very good risk reward ratio. This positions can be based on RELCAPITAL Futures contract and traders must rollover their positions to next month when the F&O contract expires on last Thursday of every month.
Fundamental strength of Relcapital:
Results were not that surprising, but in fact our short term view is neutral, when we look at the fundamentals. The stock currently trades at P/E of 29 which is very high as compared to the sector PE, this suggests us that this company is overvalued and there is very less chance that it will outperform in short term.