End of Battle & Rise of the Mammoth .

Background

India has witnessed a very interesting battle to grab the retail market share .Once the leader in retail space is now bankrupt and looking for bailouts / takeovers and to its luck the two behemoth’s are fighting for it ,Amazon & Reliance industries. Reliance has offered over rupees 24,000 crore to future group to take over the retail assets , but since Amazon is also a share holder in the Future group , they have taken the matter for legal proceedings.

Current situation

Banks in India are still reeling from the bad NPA cycle of the last decade .Failure of future group to secure Reliance’s funding will put these banks & shareholders in a huge loss , these banks have already made over Rupees 9000 crores of provision for Future group loans! Amazon is aware of this and it may end up in a situation where everyone looses , and hence amazon , future group & Reliance have agreed to solve this matter as soon as possible. The Supreme court of India has extended the deadline to 15th March 2022 to finalize consensus on the same.

What’s next?

In my view most of the hurdles are over and it only makes sense for amazon and reliance to settle disputes and move ahead. Reliance is an Indian company with a very huge network of small businesses and amazon will have to work with them either via the retail route or others. Secondly , apart from Reliance there is no real interest in the future group venture ,hence it makes sense to solve this problem and move ahead.

Our recommendation

We believe this is an exciting time to buy Reliance industries stock price with a horizon of 30 to 45 days , the stock has seen hammering due to overall economic conditions and geo political issues & war scenarios between Russia & Ukraine. But i believe this was more of a panic selling and the stock will be bought in quickly by DII’s and other institutional investors. Technically the stock has entered a bullish zone on daily charts by making a double bottom patter in the divergence indicator chart , 3 out of 3 times this indicator has given over 15% returns in past 1 year.

Buy at current price of 2325 with a horizon of 30 to 45 days for a target of 2500+

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