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The stock market witnessed a rollercoaster ride for Ola Electric Mobility Ltd. on Monday, as its shares experienced a dramatic dip followed by a significant rebound. This volatility underscores the market's cautious approach toward the company, despite the recent IPO and its position as a key player in the burgeoning electric vehicle sector. The day began with a disheartening 5.61% decline, pushing the share price to a low of Rs 103.50. However, the stock swiftly reversed course, surging by 12.08% to reach a high of Rs 116.
This dramatic turnaround, though seemingly positive, is viewed with skepticism by many analysts. The prevailing sentiment is that investors should steer clear of Ola for the short term, as the recent bounce is unlikely to sustain itself. Market expert Kush Ghodasara, speaking to Business Today TV, warned against jumping into the stock, deeming the rebound a short-lived phenomenon. This caution is echoed by Gaurang Shah, Senior VP at Geojit Financial, who advised against participating in the 'fear of missing out' (FOMO) factor driving the rally. While acknowledging the company's long-term potential, Shah highlighted the significant losses and high debt burden on Ola's balance sheet, which could hinder near-term profitability. He suggested that only investors with a high-risk appetite and a long-term outlook should consider investing.
The technical analysis also presents a mixed picture. AR Ramachandran, a Sebi-registered research analyst, identified a support level at Rs 100, suggesting that a daily close below this point could lead to a drop towards the initial public offering (IPO) price of Rs 76. Conversely, he highlighted resistance at Rs 120. Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, echoed these sentiments, stating that the stock appeared weak on daily charts and advised against buying at current levels. This bearish sentiment is further reinforced by Ola's financial performance. The company's consolidated net loss widened to Rs 347 crore in the April-June quarter (Q1 FY25), compared to Rs 267 crore in the same period last year. This widening loss, coupled with the high debt levels, underscores the financial challenges Ola faces as it navigates the competitive electric vehicle market.
Despite these concerns, Ola Electric continues to command significant market interest. The high trading volume witnessed on Monday, with over 78.97 lakh shares changing hands, demonstrates the company's appeal, particularly with the lock-in period for anchor investors ending on August 9. The company's commitment to innovation and its vision of a future dominated by electric vehicles continue to attract investors. However, the recent stock market fluctuations highlight the importance of careful consideration and a long-term perspective when investing in Ola Electric.
Source: Ola Electric shares climb 12% from day's low; what does this bounce suggest?