IRCTC share price tanks nearly 50% from record high; what should investors do now? Buy, sell, hold?

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Updated: October 20, 2021 12:40 PM

RCTC share price tanked over 46 per cent from all-time high hit in the previous session, to Rs 4,371 apiece on BSE.

IRCTC stockAnalysts say that extreme overvaluation often results in faster corrections as well which is currently being observed in midcap and smallcap stocks including IRCTC.

IRCTC share price tanked over 46 per cent from an all-time high hit in the previous session to Rs 4,371 apiece on BSE on Wednesday. The market capitalisation of the Indian Railway Catering and Tourism Corporation has declined to Rs 69,936 crore in intra-day trade today. It touched Rs 1.02 lakh crore in intra-day trade on Tuesday. The stock rose to a record high of Rs 6,393 apiece in yesterday’s intraday deals. “Railway stocks were under pressure on reports of the appointment of regulator for railways. The news was taken as a threat to IRCTC’s growing dominance in the segment. However, despite this development, IRCTC has shown a good rally in the month of October and the open interest reached near 90 per cent of the limit. Stocks enter the ban once open interest crosses 95% of the limit and comes out of it once it’s below 80%,” Ravi Singh, VP – Head of Research, Share India Securities, told Financial Express Online.

Due to this reason, traders have attributed the huge volatility to speculation that it has entered into an F&O ban. On this speculation, investors started squaring up their positions and booked profits in the stock, he said. “The up move in IRCTC was momentarily and the profit booking after the speculation has pushed down the stock substantially. IRCTC may fall further having support at 4200 and 3800 and resistance at 4800 and 5200,” Singh said.

Analysts say that extreme overvaluation often results in faster corrections as well which is currently being observed in midcap and smallcap stocks including IRCTC. “Technically, 4520 is immediate support. If broken on a closing basis 4140 is a possibility. Rs 5000 will now act as a strong resistance,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online.

IRCTC stock has been witnessing volatile profit-taking by institutional participants. Any slip in price offers an opportunity to buy for investors, an analyst said. “However, it is strongly recommended that looking at valuations, investors should enter this scrip only with an investment horizon of two years or more,” Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told Financial Express Online. Vaishnav also advised traders to use any more up move to exit as it is showing highly influenced and controlled moves defying market technicals which may be harmful to the traders.

In the traded volume terms, nearly 10 lakh IRCTC shares have exchanged hands on BSE, while a total of 1.21 crore scrips traded on NSE, so far in the day. It may be noted that next week, on 28 October 2021, IRCTC shares will turn ex-date for the stock split in the ratio of 1:5. The company has fixed 29 October 2021, as the record date to ascertain the name of shareholders entitled for subdivision or split of shares of Rs 10 each into five equity shares of the face value of Rs 2 each. The board of IRCTC approved a stock split in the ratio of 1:5 in August this year.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

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