-The momentum in some pockets of the Indian equity market highlights the unabated investor appetite for broad-brush macro investment stories, the global economic outlook and execution risk notwithstanding.
-E&P (Exploration and Production), organised retail and infrastructure are equally compelling themes; Reliance is strongly positioned in each of these segments.
-Upstream E&P (under-explored) , organised retail (under-penetrated) and infrastructure (non-existent) are equally compelling themes.
-Besides having global scale in refining and petchem, Reliance is uniquely placed in each of these areas with a commanding E&P footprint, the largest ever retail rollout attempt as well as an ambitious SEZ development plan.
– At 15.6x FY10 PE, Reliance trades at a 50-70% premium to peers and we see no fundamental upside but its 12-18% neutral index weight makes it difficult to ignore.
-More Important than the performance of existing divisions would be the listing of Reliance holdings in RIL-Retail, Reliance Lifestyle, Reliance Jewels and Reliance SEZ.
-Hedging Portfolios by shorting the Nifty may not work in an environment where-in a large cap stock like RIL is rising, however going long on RIL futures may be an alternate to Portfolio Outperformance.