Market coupling fear returns: IEX stock slips 11%; top loser on BSE

Shares of Indian Energy Exchange (IEX) slipped over 11% today after the government said it would implement the market coupling mechanism soon in the sector. In an interview with Zee Business, Union Power Minister RK Singh said that market coupling-or a uniform market clearing price for buyers and sellers in all exchanges operating in an area-will be implemented soon.

In Wednesday's trade, IEX stock hit an intraday low of Rs 145.35, down 11.39% against the previous close of Rs 164.05 on BSE. Later, the stock closed 10.24% lower at Rs 147.25 on BSE.

In terms of technicals, the relative strength index (RSI) of IEX stands at 58.9, signaling it's trading neither in the overbought nor in the oversold zone. The stock has a beta of 0.5, indicating low volatility in a year. IEX shares are trading lower than the 5 day, 20 day, 50 day but higher than the 100 day, 150 day and 200 day moving averages.

Total 33.46 lakh shares of the firm changed hands amounting to a turnover of Rs 50.75 crore on BSE. Market cap of the firm fell to Rs 13,232.91 crore.

In the beginning of June last year, IEX stock fell 10% to hit its 52-week after the power ministry directed Central Electricity Regulatory Commission (CERC) to implement the process of market coupling in a timely manner.

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 including IEX among others.

IEX, which is the market leader, has the highest volumes in terms of power trading. Market coupling will dry up volumes in a significant manner for IEX among other power trading platforms, fear analysts. This led to the crash in the IEX stock in the current session.

Brokerage Nuvama has a reduce stance on the IEX stock with a target price of Rs 127.

Shares of Indian Energy Exchange (IEX) are likely to face near-term headwinds from three factors which are i) Implementation of market coupling, ii) high power price-driven shift in power volumes away from spot market to longer-duration instruments, iii) rising competition, said Nuvama Institutional Equities.

Also read: Hot stocks on January 17: RVNL, YES Bank, Zomato, IEX, Cochin Shipyard and more

Also read: Stock recommendations by analysts for January 17, 2024: AB Capital, Cipla and UBL