MCX share price tanks 6%; ICICI Securities says extension of services contract with 63 Moons 'disappointing' - check target

MCX Share Price NSE, BSE: Share of Multi Commodity Exchange of India or MCX tanked more than 6 per cent on Monday, January 2, as the company announced to extend the support services being rendered by its existing vendor -- 63 Moons Technologies, for six months, beginning January 1, 2023.

The stock opened at Rs 1,501 on NSE, down by more than 3 per cent from the previous close of Rs 1554.20. Selling pressure dragged the stock more than 6 per cent to trade at the day's low of Rs 1,441.50 around Rs 9:25 AM.

Zee Business panellist and market expert Kunal Saraogi recommended avoiding buying the MCX shares for now as he said that there is a breakdown on the chart. The stock has major support at 1,400. A further fall of Rs 40 is likely if MCX breaks the support level.

"Investors should let the dust settle. They can buy it when the stock gains some stability around Rs 1,400," he said.

Notably, MCX has been planning to change its software and shift to Tata Consultancy Services (TCS) from 63 Moons. However, the transition could take another 6 months.

According to Zee Business channel research, the decision to extend the services with the existing vendor could impact the company's financials as it would cost more. 63 Moons Technologies' software support and maintenance agreement to MCX
ended on December 31, 2022.

Meanwhile, domestic brokerage ICICI Securities has downgraded its rating on MCX to Add from Buy with a revised target price of Rs 1,669 (Rs 1,795 earlier).

ICICI Securities in its report said that the decision is disappointing considering that the new extension is longer than the first extension of 3 months along with the related higher cost incidence now in FY23/24. 

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Shares of MCX have yielded a negative return of around 9 per cent in the past one year. The stock's 52-week range is Rs 1,697.10 - Rs 1,143.00. MCX is India’s largest commodity exchange.