IRCTC shares decline over 31% in 2 days from life high - what analysts say on technical and fundamental front - check here

Continuing its decline for the second straight session on Wednesday, the shares of Indian Railway Catering and Tourism Corporation (IRCTC) slumped over 31 per cent in the last two trading sessions as compared to its 52-week high of Rs 6393 per share which was hit on October 19, 2021. 

The stock on Wednesday intraday declined by 18.5 per cent and traded weak entire session today, to eventually end over 17 per cent lower to near day’s low level at Rs 4371.25 per share on the BSE. 

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The stock has been reporting weakness since yesterday on the back of heavy volumes and buzz that the government is appointing a regulator for the rail sector. The counter has been the top laggard in the broader markets (mid-cap category). 

The stock in the last four months gained 218 percent on the back of heavy buying volumes as well as the country moves towards full unlocking with a decline in COVID cases and a surging vaccination drive. 

On a fundamental basis, TradeSwift’s Director Sandeep Jain believes that if the stock corrects for Rs 1000-2000 per share, it won’t make much difference as the stock is over-valued being PSU firm as compared to other government-backed PSU companies. 

He adds, the scrip is indeed a quality stock having a new-gen business model and monopoly in train ticketing services, however, what if the government decides to privatise or disinvest some stake in the company and competition arises within the ticketing segment. 

He terms the correction in the stock is mainly due to high volume profit booking in the stock and the regulator/controller in the rail sector may likely act as trigger for this correction. 

While on the technical front, the market expert Sacchitanand Uttekar said, the rally we witnessed post the stock coming out of F&O ban was of short-covering, and with two day’s data we cannot derive whether more shorts have been added or earlier positions have been neutralised. 

He believes, last two days’ action of price movement is huge and an inversing kind of candle is visible on the weekly charts after a big series, which is negative. The only positive is that after a month-long rally, the counter has come down to its 20-Day Weekly Exponential Moving Average. 

Uttekar doesn’t see either any major incremental strength or any weakness and advises the investors to avoid the stock for the next few days and urges them to wait till the counter settles.