Reliance Industry (RIL) is considered as torch bearer for Indian Stock Market, and it is, without much doubt. After the recent crash RIL recovered on 9th April onwards, earlier than the market, and NIFTY followed it. On 17th April RIL showed high of 2714, but closed in red at 2640.
Thereafter, RIL remained strongly between 2600-2700, even during the continuous fall in NIFTY for six consecutive trading session from 2nd May to 9th May, and eventually RIL slipped below 2600 on 9th May.
Thereafter it tried to recover with the market, but gradually it has been slipping beyond 2500 and on 30th May it went to the low of 2390 and closed at 2403, showing weakness in the trend.
Last two falls were with greater volume, almost double, than average trading days. Increase in volume suggests that people inclined towards the current trend. So in a down day more volume shows that there was large sell of than average and it is also negative indicator. People who have been holding the script since some time sees no upside in near future thus start selling off.
Such attitude is clearly reflected in Chaikin Money Flow (CMF) indicator . On 30th May RIL generated largest negative bar on CMF in its recent history, which shows people are distributing (selling) the script.
Accumlation/distribution line is very clear. A/D line is sliding since 21st May and eventually has gone in negative territory , after more than six weeks it has gone in negative territory, lastly it was in negative on during third week of March’08.
Interstingly , MACD lines have been sliding down since 9th May, earlier than all other indicators, and with negative histogram. MACD 20 line is now in negative territory.