Why is Reliance power share rising? Reasons behind the sudden surge
Shares of Reliance Power Ltd soared on Friday, hitting a 52-week high of ₹59.75 on both the NSE and BSE, driven by a confluence of strong financial results, a major renewable energy contract win, and growing investor optimism in the company's clean energy strategy.
The stock, at market closing on Friday, was trading at ₹58.09 on the NSE, 11.24% up from the previous day. It outperformed both the indices - Sensex and Nifty - which ended the day in red.
The stock has now gained nearly 30% in May alone and over 140% in the past 12 months, reflecting a resurgent investor sentiment.
The primary catalyst behind Friday's rally is the announcement made by the company on May 28, post market hours, that its subsidiary Reliance NU Energies received a Letter of Award (LoA) from SJVN for a 350 MW solar power project integrated with a 175 MW/700 MWh Battery Energy Storage System (BESS).
The project, which is part of a larger 1,200 MW solar and 600 MW/2,400 MWh BESS tender, was highly competitive, with participation from 19 developers and oversubscription by over 4 times, underscoring the sector's strong growth potential. Reliance NU Energies secured the project at a fixed tariff of ₹3.33/kWh for 25 years.
Once commissioned, this project will add 600 MW of solar DC capacity and 700 MWh of BESS capacity to Reliance Power's renewable portfolio. The company now boasts a clean energy pipeline of 2.4 GW of Solar DC and over 2.5 GWh of BESS capacity, positioning it as India's largest player in the integrated Solar and BESS segment.
The stock's rally is also supported by a significant turnaround in the company's financial performance. For Q4 FY25, Reliance Power posted a consolidated net profit of ₹126 crore, compared to a loss of ₹397.56 crore in the same quarter a year earlier. The improvement came despite a slight dip in total income, largely due to substantially lower expenses, which fell from ₹2,615.15 crore to ₹1,998.49 crore.
For the full FY25 fiscal, the company recorded a consolidated net profit of ₹2,947.83 crore, a stark contrast to a loss of ₹2,068.38 crore in FY24. It also completed debt servicing of ₹5,338 crore over the past 12 months, and improved its debt-to-equity ratio from 1.61:1 to 0.88:1, reflecting stronger financial health.
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Vijay L Bhambwani's Ticker: Retail traders show signs of aggression
Dear reader, Last week, I wrote that Japanese economic tremors could impact domestic market sentiments even though the US downgrade by Moody's would not. That hypothesis was validated by the markets as the Nifty slipped mildly, even as the Bank Nifty gained marginally. The Reserve Bank of India (RBI) will announce its decision on interest rates on Friday, keeping banking stocks buoyant. Bankers expect a rate cut after the policy meeting. Do remember that the banking and financial sector stocks command a weightage of 37.74% in the Nifty 50. This sector is single-handedly responsible for swaying the broader markets with itself. Which is why it is known as the 'swing sector" by systems traders. Should the RBI cut coupon rates by up to 0.25%, the markets may take it in their stride. As I wrote last week, any cut of 0.50% or higher will be a negative development from the point of cash carry trade considerations. Banking stocks hold the key to the near-term future trend of the markets. Big money is likely to continue pushing interest rate-sensitive stocks higher ahead of the RBI announcement on Friday, cushioning the downside. As I wrote in last week's column, the market was preoccupied with the derivatives expiry process, and volatility remained above average. Sector-wise analysis shows public sector undertakings (PSUs) stocks remaining in the limelight this week, too. Oil and gas stocks will see hectic activity, as the Organization of the Petroleum Exporting Countries Plus (Opec+) has announced output hikes, and lower prices should enthuse inflation hawks. Industrial metal prices witnessed the routine month-end spikes and are likely to see higher levels meeting resistance from sellers. That means stock prices of metal mining stocks may also see limited upside potential. Oil and gas prices are likely to remain under pressure, too, as higher levels are encountering selling pressure. The recent narrative that was in force of a shortage of natural gas prices has been replaced by a new hypothesis that the markets are actually well supplied. This has been my view for many quarters. Welcome to the oil and gas markets—also known as 'widow makers." The level of dis-information protocols (DIP-ping) is the highest amongst all asset classes. Bullion remains a long-term bullish story, and delivery-based investors should sit tight on their holdings. Look beyond 2025, if not further. Fixed-income investors should keep the powder dry and wait for the RBI decision on Friday before making their next move. Analysis of the margin-funded trading data shows that retail segment borrowings from brokers for investing in stocks reached their highest level after the end of January 2025. This shows retail aggression is on the rise, which is a double-edged sword. The retail segment is the most emotional segment of the market and also the weakest financially. Retailers tend to surrender their positions if negative news emerges, resulting in crowded exits. Continue to trade with protective stop losses and tail risk (Hacienda) hedges in place. A tutorial video on tail risk (Hacienda) hedges is here - Rear View Mirror Let us assess what happened last week so we can gauge what to expect in the coming week. The broad-based Nifty fell, whereas the Bank Nifty gained mildly. The US dollar index gained mildly and triggered profit taking in bullion. Oil fell, and gas rose. Much of the gains in gas prices are due to the cost of carry (rollover/financing charges). The rupee weakened versus the dollar, which made bulls slightly nervous. Indian bond yields were steady ahead of the RBI meeting. The NSE gained 0.53% in market capitalisation, which shows broad-based buying and some optimism. Market-wide position limits (MWPL) fell routinely on expiry. US markets rallied and provided tailwinds to our markets. Retail Risk Appetite I use a simple yet highly accurate yardstick for measuring the conviction levels of retail traders—where are they deploying money? I measure what percentage of the turnover was contributed by the lower and higher risk instruments. If they trade more of futures, which require sizable capital, their risk appetite is higher. Within the futures space, index futures are less volatile compared to stock futures. A higher footprint in stock futures shows higher aggression levels. Ditto for stock and index options. Last week, this is what their footprint looked like (the numbers are the average of all trading days of the week) – The high-risk, high-volatility, and capital-intensive future segment saw higher turnover as traders rolled over their trades to the next derivatives cycle, resulting in dual turnover being reported. Turnover fell uniformly in the relatively lower-risk options segment. Even rollover is an indication of higher risk appetite, so the outlook remains optimistic for now. Matryoshka Analysis Let us peel layer after layer of statistical data to arrive at the core message of the first chart I share is the NSE advance-decline ratio. After the price itself, this indicator is the fastest (leading) indicator of which way the winds are blowing. This simple yet accurate indicator computes the ratio of the number of rising stocks compared to falling stocks. As long as the stocks that are gaining outnumber the losers, bulls are dominant. This metric gauges the risk appetite of one marshmallow traders. These are pure intraday traders. While the Nifty logged smaller losses last week, the intraday buying conviction eased. The advance-decline ratio fell to 1.05 (prior week 1.21), indicating 105 gaining stocks for every 100 losing stocks. That is a slender buying conviction shown by retail traders. This ratio must remain above the 1.0 level throughout this week if bulls are to have the upper hand. A tutorial video on the Marshmallow theory in trading is here - The second chart I share is the market-wide position limits. This measures the amount of exposure utilised by traders in the derivatives (F&O) space as a component of the total exposure allowed by the regulator. This metric gauges the risk appetite of two marshmallow traders. These are deep-pocketed, high-conviction traders who roll over their trades to the next fell routinely after expiry, but the 26% level is lower than the 26.13% of the previous month's post-expiry week. This can be partially explained by the addition of nine new stocks to the F&O list on Friday. As long as prices and MWPL rise in tandem, bulls still have a fair chance of remaining dominant over bears. A dedicated tutorial video on how to interpret MWPL data in more ways than one is available here - The third chart I share is my in-house indicator 'impetus.' It measures the force in any price move. Last week, the Bank Nifty rose with rising impetus readings, whereas the Nifty fell with lower impetus readings. That means the Nifty fell on poor momentum, and the Bank Nifty rose on higher momentum. This divergence is unhealthy for the market outlook. I remind my readers that I consider these two indices like the two wheels of a bicycle. Should they move in opposite directions, they can topple the bicycle (markets). The final chart I share is my in-house indicator 'LWTD.' It computes lift, weight, thrust and drag encountered by any security. These are four forces that any powered aircraft faces during flight, so applying them to traded securities helps a trader estimate prevalent sentiments. While the Nifty logged smaller losses last week, the LWTD indicator rose to 0.11 (prior week -0.28). That tells me buying support maybe improved this week. That is also supported by the fact that the expiry process is over, and fresh retail buying is usually seen. A tutorial video on interpreting the LWTD indicator is here - Nifty Verdict The weekly chart shows this index logging a bearish candle for the second week in a row. That tells us that the bulls are hesitant. The 24,800 level, which I advocated as a trend determinator, was violated even on a closing basis. To reverse the short weakness, bulls will have to push the Nifty above the 25,250 level on a sustained closing basis. In case of declines, too, the 24,800 must be protected. Only then will the outlook turn positive in the near term. The price remains above the 25-week moving average, which is a proxy for the six-month holding cost of a retail investor. That means the medium outlook is positive for now. Your Call to Action Watch the 25,250 level as a near-term resistance. Staying above this level strengthens bulls. Last week, I estimated ranges between 57,200 – 53,600 and 25,625 – 24,075 on the Bank Nifty and Nifty, respectively. Both indices traded within their specified resistance levels. This week, I estimate ranges between 57,400 – 54,100 and 25,475 – 24,025 on the Bank Nifty and Nifty, respectively. Trade light with strict stop losses. Avoid trading counters with spreads wider than 8 ticks. Have a profitable week. Vijay L. Bhambwani Vijay is the CEO of a proprietary trading firm. He tweets at @vijaybhambwani
