Shares of Indian Railway Catering and Tourism Corporation (IRCTC) crashed over 18 percent on Wednesday, extending Tuesday’s losses. The stock has been in a downtrend for the last two days and has corrected over 22 percent during the period. The scrip opened with a 10 percent gap down. At 09:51 am, IRCTC was 16.8 percent lower, quoting at Rs 4,462.95.
The stock’s near 250 percent returns in the past one year has likely made investors a bit cautious, prompting them to cash in on recent gains.
Besides, heavy losses in the broader market for two consecutive sessions now which suggested that investors are nervous after the recent rally also weighed on IRCTC stock today.
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The stock was purely a momentum play and now investors are merely taking some money off the table, said a technical analyst at a domestic brokerage firm.
However, Nirav Karkera, head of research at Fisdom believes, “At the face of it, it almost seems as if market forces have reacted to talks around the appointment of a dedicated regulator for railways and have perceived it as a threat to IRCTC's growing dominance in the segment. However, the decline can't be completely attributed to this development”.
A stock-specific critical development was the breaching of market-wide position limits of 95 percent and the imminent placement of the scrip under F&O ban by the exchange is expected to have triggered a scare-trade by heavyweight traders seeking to secure positions before the ban, Karkera pointed out.
“The fundamentals of the company remains intact with a lot of potential for value unlocking through several of its non-operating segments which may not be efficiently priced in yet. We do not foresee any significant change in the fundamentals and prospects of the business in the near term at least,” he added.
The technical analyst believes IRCTC's stock is not a good buy yet and pointed out that Rs 4,000 is the support level for the stock and one could buy the stock when it falls to those levels.
The stock would face strong resistance at Rs 4,950, and Rs 5,500 would be the next resistance level, she added.
(Edited by : Ajay Vaishnav)
First Published: IST