All rise in Reliance Industrial Infrastructure.

>> Friday, April 17, 2009

All saw a sudden boom in RIIL (Reliance Industrial Infrastructure.) The stock which made the people crazy giving 150% + returns in a couple of weeks.
At present RIIL's CMP is 737. It had touched Rs 920 odd levels from 35o odd levels.

The main reasons why the stock rose - (The two main reasons)

  • There were rumors in markets that RIIL is merging with RIL.
  • RIL is planning to make RIIL as a gas carrier & distribution company. Reliance Gas Transportation Infrastructure Ltd. (RGTIL)
RGTIL is a closely held company of Mukesh Ambani, which had put up 1,400 kms., 48 inches diameter pipeline from Kakinada to Bharuch, capable to transport 120 mmscmd of gas , having set at a project cost of Rs. 15,000 crores.

It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector.
This move could benefit the stock in long term on the basis of Market Cap.
The current Market Cap is 1,114 Rs Crores and the pipeline project is worth over Rs 15,000 crore. If RIIL and RGTIL are merged the market cap of RIIL would be over Rs 17,000 Crores.

This would benefit the share holders.

Considering the current market price (CMP) of 737.35 the price seems to be over valued due to speculation.
The fair price may lie below 600 levels.

Here are few short term Support and Resistance for RIIL
Spot Price - 750
Support - 610, 670 , 702
Resistance - 794, 851 , 908

PS - What we learn from this is that don't go according to rumors!

Happy Investing.