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Shares of Indian Railway Catering and Tourism Corporation (IRCTC) witnessed a sudden slump of 1,400 or 15% towards close to 4,995 per share in Tuesday's trading session after hitting a record high in early deals. The stock closed at 5,363 apiece, down more than 8%. IRCTC shares had hit a record high of 6,393, gaining over 7% with its market capitalization crossing 1 trillion in early deals.

The broader markets were also extremely volatile today. The Sensex after hitting 62,000 in early trade ended down 49 points. Major profit booking was seen in midcap and smallcap space. “Investors should be cautious at these levels after the movement seen in today's trade especially in midcaps and smallcaps counters. Investors are advised to keep strict stop-loss to their positions. Also today railway stocks were seen in pressure at day's close after the outcome of news of appointment of regulator for railways. IRCTC was down 15%. Today major profit-booking was also witnessed in power stocks," says Rahul Sharma, co-founder of Equity99.

“Next support for IRCTC is placed at 4750 -4500 levels , from where a bounce back is expected, so buying on decline is suggested only for long term investors. Traders are advised to keep strict stop-losses as the stock is under profit-booking pressure and will remain volatile too," he added.

Santosh Meena, Head of Research, Swastika Investmart, said: “The market witnessed a sharp sell-off after hitting new milestones and we are seeing the first sign of distribution in the market as the Nifty and Sensex ended with the mild cut but the real pain was in the broader market because the Nifty Midcap index ended with a cut of more than 2%. The fall was led by the names who were top performers in the last few days like IRCTC and Tata Power."

“IRCTC's fundamentals are still strong but there is valuation concern after a steep run and there was a clear speculative move as it was easy to make money for the traders every day so we are seeing a technical correction where the psychological level of 5000 is immediate support but there is a risk that it may slip below this and may head towards 20-DMA which may coincide with 4500 level however 4000-3800 will be a critical demand zone to take fresh buying positions," he added.

IRCTC had entered the primary markets by listing in October 2019 and enjoys a strong monopoly. It has 100% market share in rail network. It’s also the only entity authorised to manage catering services on trains and major static units at railway stations.

The Indian Railways' PSU stock has been in a continuous run of giving stellar return to its shareholders since listing in October 2019. Against its IPO issue price, IRCTC share price has shot up over 1,700% from 320 per share to 6,000 per stock levels. The multibagger stock so far this year is up around 245% whereas it has rallied 275% in a year's period.

“The decline today hints at a healthy correction from these levels while the overall outlook for the counter remains positive. The direction of the broad market shall govern the direction of the stock price move in the future. If the pre-Diwali rally continues, the counter may still see an up move from here, and the immediate support is around 4750 levels," said By Sonam Srivastava, Founder, Wright Research.

 

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