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Published: September 24, 2024
Updated: September 24, 2024

RPower Shares Surge to New 52-Week High: Is it Time to Exit This Multibagger?

Reliance Power Sees Strong Momentum in 2024

Reliance Power Ltd (RPower), led by Anil Ambani, has shown a strong upward trajectory, with shares reaching a fresh 52-week high. During early trade on Monday, the stock initially dropped by 4.62%, hitting an intraday low of Rs 44.22. However, as the session advanced, it rebounded sharply, rising 10.06% from that low to touch Rs 48.67, marking a new yearly high.

On a year-to-date (YTD) basis, the stock has delivered an impressive 103.22% gain, transforming into a multibagger for investors. Over the last month, RPower has surged 61.69%, continuing a bullish streak for the 13th consecutive session.

Upcoming Board Meeting on Fundraising Plans

RPower has scheduled a key board meeting on October 3, 2024, to discuss raising long-term resources. This could be achieved through the issuance of equity shares, equity-linked securities, or warrants convertible into equity shares. The company is also considering other options like preferential issues, qualified institutional placements (QIP), rights issues, or foreign currency convertible bonds, and will determine the issue price based on market conditions.

Recently, the company allotted 46.20 crore equity shares worth Rs 1,524.60 crore to its promoter Reliance Infrastructure Ltd, along with two non-promoter entities. This move aims to bolster RPower’s renewable energy portfolio.

High Volatility Triggers Surveillance Measures

The stock exchanges, BSE and NSE, have placed RPower under the short-term Additional Surveillance Measure (ASM) framework, highlighting the high volatility in its share price. This framework is used to caution investors about potential risks associated with rapid price movements.

Time to Book Profits?

Several market observers suggest that RPower’s stock, while continuing to rise, may have reached overbought levels. Investors are being advised to consider booking profits, given the current risk-reward ratio. Those holding the stock could reassess their positions and take profits as the stock is trading near its resistance level, with warnings that a dip below support could lead to further declines.

Technical Indicators Show Overbought Levels

The stock is currently trading above several key simple moving averages (SMA), including its 5-day, 10-, 20-, 30-, 50-, 100-, 150-day, and 200-day averages. However, RPower’s 14-day relative strength index (RSI) stands at 87.08, signaling an overbought condition, as values above 70 typically indicate this. Investors are urged to exercise caution given these technical signals.

Profit Booking Amid High Volatility May Be Wise

While RPower has delivered outstanding returns in 2024, the current overbought technical indicators and the volatility caution triggered by exchanges suggest that it might be prudent for investors to book profits. With an important board meeting on the horizon and potential fundraising efforts, market conditions remain fluid. Investors should carefully weigh the risks before making new entries at these elevated levels.