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The Indian Energy Exchange (IEX) Ltd experienced a significant decline in its share price on Tuesday, driven by concerns surrounding market coupling. Market coupling refers to a unified market clearing price for both buyers and sellers across all exchanges operating within a specific region. The stock, having reached its 52-week high of Rs 244.35 during intraday trading, ultimately closed at Rs 211.60, representing a 11.56% drop. Despite this decline, the stock has still witnessed impressive gains over the past six months, registering a 57.91% increase, and a year-to-date (YTD) growth of 26.10%.
The sharp downturn was triggered by a news report suggesting the implementation of market coupling by the end of the current fiscal year or the beginning of the next fiscal year. However, Business Today was unable to independently verify this information. Several technical analysts indicated the possibility of further downward movement in the stock. One such analyst recommended that short-term traders exit their positions in IEX. However, the analyst emphasized the long-term viability and potential of the company, stating that IEX's long-term prospects remain intact.
Kush Ghodasara, a market expert, elaborated on the technical perspective in an interview with Business Today TV. He acknowledged IEX's positive long-term potential but highlighted the recent short-term rally. Since May's expiry level of Rs 136, the stock had consistently set new highs on a week-on-week basis. From a technical standpoint, IEX has breached support levels associated with both short-term and medium-term moving averages. Ghodasara suggested a potential profit-booking phase culminating at the Rs 180 level and advised short-term traders and investors to consider exiting their positions.
Chandan Taparia, Senior VP of Equity Derivatives & Technical at MOFSL, echoed the sentiment regarding the short-term gains. He observed that IEX's stock had experienced a notable surge in the recent past and has currently formed a bearish engulfing pattern. He cautioned investors seeking fresh entry to await further dips in the stock price.
Further technical indicators revealed that the stock was trading below the 5-day, 10-day, and 20-day simple moving averages (SMAs) but above the 30-day, 50-, 100-, 150-day, and 200-day SMAs. The scrip's 14-day relative strength index (RSI) stood at 49.92. A level below 30 is considered oversold, while a value above 70 indicates overbought conditions.
According to data from the Bombay Stock Exchange (BSE), IEX boasts a price-to-equity (P/E) ratio of 59.14, against a price-to-book (P/B) value of 22.51. The company's earnings per share (EPS) are recorded at 4.05, with a return on equity (RoE) of 38.04.
IEX's core business revolves around providing an automated trading platform for the physical delivery of electricity, renewables, and certificates. The company operates diverse trade markets, encompassing the electricity market, green market, and certificates.
Source: IEX shares tumbled 12% on market coupling fears; is it time to exit this stock?