Reliance Power Hits 5% Lower Circuit, Amid Profit-Booking After 60% Surge

For the third straight day, Reliance Power's stock fell 5% as a result of profit-booking, after seeing a sharp 60% increase last month on the company's announcement that it was debt-free. In the past year, Reliance Power's stock has increased by 177%, more than tripling the capital invested by investors. Nifty, in contrast, increased by almost 28% throughout this time.

On October 7, Reliance Power's stock fell further as investors booked profits, closing the day at the five percent lower circuit for the third straight session. The stock is currently trading 11% below ₹53.64, its 52-week high, which it hit last week. Since the Anil Ambani-led business said it was debt-free, the stock has increased by more than 60%, driven by positive market confidence. Investors hurried to book gains following this spectacular surge in the midst of a wider market sell-off.

Reliance Power recently disclosed that it has been released and discharged of its corporate guarantee, undertakings, and all obligations and claims in relation to the outstanding debt of subsidiary Vidarbha Industries Power Limited (VIPL), amounting to ₹3,872.04 crore. This news strengthened sentiments surrounding the stock on September 18. The business declared that it has resolved all of its disagreements with CFM Asset Reconstruction Private Limited (CFM), citing the promise of 100% of VIPL's shares in CFM's favor against the release and discharge of Reliance Power's corporate guarantee.

Prior to that, the business obtained a significant 500 MW/1000 MWh battery storage contract from the Solar Energy Corporation of India (SECI). With this agreement, Reliance Power is positioned to play a significant role in one of the biggest standalone battery energy storage projects in the world.

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Technically, the 5-day, 50-day, 100-day, and 200-day moving averages (DMAs) are being outperformed by the price of Reliance Power shares. At 79, the stock's relative strength index (RSI) indicates that it is trading in the overbought area.

Reliance Power's stock price, according to SEBI-registered independent research analyst Abhijeet Ramachandran, is overbought and bearish on the daily charts, with significant resistance at ₹53.4. "Investors should book profits at current levels as a daily close below support of ₹48 could lead to ₹35 in the near term," he stated.

Reliance Power's shares were caught at a 5% down circuit at 1:22 pm, trading at ₹48.40 on the NSE. The stock has increased by over 102% so far this year, surpassing the 15% returns of the benchmark Nifty.

The counter has increased by 177% in the last 12 months, more than tripling the money invested. Nifty, in contrast, increased by almost 28% throughout this time.

To Summarize

Reliance Power shares declined for a third consecutive day, losing 5% as investors booked profits after a recent 60% surge spurred by the company’s debt-free announcement. This year alone, Reliance Power has gained over 102%, significantly outperforming the Nifty index, which rose by 15%. Recent developments have fueled investor optimism, including Reliance Power’s settlement with CFM Asset Reconstruction and the discharge of a ₹3,872 crore debt obligation related to its subsidiary, Vidarbha Industries Power Limited. Additionally, a 500 MW battery storage contract from SECI positions Reliance Power strategically in renewable energy. However, analysts advise caution, noting overbought indicators and potential resistance at ₹53.4, with recommendations for profit booking as the stock faces downward pressure.