IEX share price hits new 52-week low, slumps 15%; Here's why
Indian Energy Exchange (IEX) shares drop 15% to a 52-week low of ₹116.05 after the Power Ministry ordered the implementation of 'market coupling' for spot power trading. ICICI Direct Research predicts a significant reduction in volumes for IEX and other trading platforms.
PremiumIndian Energy Exchange (IEX) shares touched new 52-week low of ₹116.05 and slumped 15% on Friday's trade on BSE. After news broke that the Power Ministry had ordered the Central Electricity Regulatory Commission (CERC) to implement the ‘market coupling’ method for spot power trading, the stock's slide from Thursday's session has continued. IEX shares opened at ₹127.60 apiece on Friday.
According to Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One, IEX is overall down around 20% this week, and they are seeing strong volume as well, prices have slipped below March swing lows, momentum is on the negative side and one should avoid trying to catch falling knife, 115 is next support and resistance 130.
At 10:11 IST, IEX shares hit intraday high of ₹129.40 and low of ₹116.05 on BSE. The stock price dropped 22.4% during the past year, underperforming its sector by 47.7%, as per trendlyne data.
ICICI Direct Research in its report stated that IEX is the industry leader and has the biggest volume of power trading. This will significantly reduce volumes for IEX and other powerful trading platforms, taking away the moat from IEX's ability to generate liquidity and price discovery.
Market coupling refers to forming of a single power trading entity owned by the government where price discovery will happen with power getting dispatched to short-term power trading platforms.
Brokerage house, Nuvama Institutional Equities in its report said that this move of Ministry of Power has a big negative impact for IEX.
Currently, IEX is the most trusted platform for electricity spot price determination in India, which is its business moat. However, introduction of a full-fledged market coupler implies an independent third-party will collate all buy/sell bids and derive a uniform market price across all exchanges.
“This potentially negates IEX’s ‘moat’, as other exchanges can eat into its market share over time. We reiterate our braveheart ‘reduce’ rating on the stock with a target price of ₹127," said the brokerage in its report.
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