Brightcom Group shares dive 10% in 2 days; stock still up 92% in a month: Should you buy, sell or hold?

Shares of Brightcom Group Ltd extended their fall for the second consecutive session in Friday's trade. The stock today slipped 4.98 per cent to hit the lower circuit level of Rs 31.66 against a previous close of Rs 33.32. The scrip has lost 9.72 per cent in back-to-back sessions. That said, Brightcom is up 91.76 per cent in the past one month. At today's low price of Rs 31.66, the multibagger counter has rebounded 241.53 per cent from its one-year low of Rs 9.27, a level seen on April 28, 2023, when it turned into a penny stock.

In June, the stock has traded lower in just three out of 17 sessions so far. Brightcom, which is backed by seasoned investor Shankar Sharma, has zoomed 1,483 per cent in the past five years. As of March 2023, Sharma owns a 1.24 per cent stake in the company.

Earlier this month, market regulator Sebi (Securities and Exchange Board of India) imposed a fine of Rs 40 lakh on Brightcom Group and its promoters for flouting regulatory norms related to insider trading from April 2020 to August 2021.

In response, Brightcom said, "The adjudication order pertains to a distinct and separate matter. We want to clarify that this order is based on a different show-cause notice that Sebi initiated on November 23, 2022. The adjudication order, covering the period from April 1, 2020, to August 13, 2021, addresses specific aspects such as disclosure, code of conduct, execution of trades during the trading window closure period, and contra trade."

The company further stated that it is consulting legal advisors to carefully evaluate the order and determine the appropriate steps, which may include compliance with the directives provided.

For the unversed, Brightcom is under the scanner of market regulator Sebi over concerns of irregular and incorrect filing of shareholding pattern. The company, in this regard, has also issued a lengthy clarification previously.

Bourses BSE and NSE have put the securities of Brightcom Group under the long-term ASM (Additional Surveillance Measure) framework. Exchanges put stocks in short-term or long-term ASM frameworks to caution investors about high volatility in share prices.

 

Technical analyst views

VLA Ambala, Research Analyst at Stock Market Today, said, "We had recommended Brightcom Group to buy between Rs 16 and Rs 20 range which was its listing price and since there it has made a high of 35.40 so far which is almost 80 per cent return in just 2 weeks. Now those who are already holding the stock and expecting more gains should place a trailing stop loss at Rs 23 for further targets between Rs 40 and Rs 65. One must understand that everyone is not holding stock with long-term view. Some of them are doing swing trading too. So, profit booking is a part of the journey and that is why pullbacks may exist. For any fresh long positions, one can wait for a pullback ranging Rs 31 to Rs 28."

On the other hand, Ravi Singh, Vice-President and Head of Research at Share India, said, "The stock looks strong, trading above 50-DMA (Day Moving Average) but below 200-DMA with low volumes. It can hit a target of Rs 40."

AR Ramachandran from Tips2trades said, "Brightcom Group stock price is bullish but also very overbought and has next resistance now at Rs 44.30 on the daily charts. Investors should book profits at current levels as a daily close below support of Rs 28.80 could lead to target of Rs 19 in the near term."

The group consolidates ad-tech, new media and IoT (Internet of Things) based businesses across the globe, primarily in the digital eco-system. Brightcom's consumer products division is focused on IoT. The company has a presence in the US, Israel, Latin America ME, Western Europe and Asia Pacific regions.

Meanwhile, Indian equity benchmarks traded lower in afternoon deals today. The domestic indices were dragged by weakness across all sectors due to profit-booking. Sensex hit new record highs in each of the previous two sessions, while Nifty came within one point of its all-time high on Thursday before witnessing selling pressure at near-record levels.

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