The Reliance effect

October 1, 2007

The S&P CNX nifty (NSE index) has risen by around 13.2 % in the last one month with the main move happening after the fed rate cut on 18th. The funny thing is that all reliance stocks have shot up since then. 

The following is the increase in the price of these stocks in the last one month 

RIL – reliance industries – 20.5%

Reliance energy – 75%

RNRL – 115%

Reliance communication – 13.1%

Reliance Chemotex – 147%

RPL – 41% 

So I guess anything with the name reliance is in a bull market. The industry does not matter, only the management should be with reliance. 

I cannot figure out what is happening. There seems to be two markets now. One is in a bull phase consisting of reliance stocks and a few others, with the rest of the market more or less even. So my approach is to stay away from the overvalued stuff and hold or buy what seems undervalued. Ofcourse i am not into momentum trading, so this approach may not work for those who are into that. 

Disclosure – I hold RIL and REL. So I have one portion of my portfolio galloping whereas the rest is barely moving

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