RVNL shares fall 15% from record high; is the stock headed toward double-digit mark?

Shares of Rail Vikas Nigam Ltd (RVNL) have lost over 15% from their record high in three sessions. The Indian Railways stock, which touched an all-time high of Rs 144.50 on May 8 this year closed at Rs 121.90 on BSE today, implying a fall of 15.64% during the period. It was stuck in the lower circuit of 5% through the session today. Despite the ongoing correction, the stock remains a multibagger, rising 280% in a year and gaining 78% in 2023. On the other hand, the 30-stock Sensex has gained 14% in a year and risen 1.81% in 2023. The parent index BSE 500 has climbed 11.42% in a year and is unchanged when compared to a year-to-date basis.

ALSO READ: RVNL shares: Up 381% from 52-week low, should investors expect correction in the railway stock?

Meanwhile, in the current trading session, the RVNL stock ended 5% lower at Rs 121.90 on BSE. Total 7.51 lakh shares of the firm changed hands amounting to a turnover of Rs 9.16 crore. Market cap of RVNL fell to Rs 25,416.40 crore on BSE. The stock hit a 52-week low of Rs 29 on June 21, 2022. It has risen 320.34% from its yearly low.

In terms of technicals, the relative strength index (RSI) of RVNL stands at 43.8, signaling it's trading neither in the overbought nor in the oversold zone.

RVNL stock has a one-year beta of 0.7, indicating very low volatility during the period. Rail Vikas Nigam stock is trading higher than the 20 day, 50 day, 100 day and 200 day moving averages but lower than 5 day moving averages.

The Q3 earnings show of the firm were satisfactory. In the December quarter of the last fiscal, net profit climbed 30.51% to Rs 382.42 crore against Rs 293.01 crore during the previous quarter ended December 2021. Sales stood flat at Rs 5012.09 crore in Q3 against Rs 5049.24 crore during the quarter ended December 2021.

Here's a look at what analysts said about the prospects of the RVNL stock.

Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One said, "RVNL has witnessed a strong spurt in price action in the recent period and has surged over 80 percent in the last couple of trading weeks. Post such a steep upsurge, the counter entered the overbought territory and hence, one should not rule out the possibility of cool-off. As far as levels are concerned, immediate support is placed around the Rs 110-100 zone in the comparable period."

Pravesh Gour, Senior Technical Analyst, Swastika Investmart said, "RVNL is in a strong uptrend and has broken a bullish flag formation. It created a base around Rs 100; however, Rs 140 is an immediate resistance where it may see some pause, but above this, it is likely to head towards Rs 150 levels. On the downside, Rs 100 is a major support at any correction, while Rs 87 is the next critical demand level. MACD and RSI are supporting the strength of the current movement. Investors can follow the buy-on-dip strategy when taking a new position on the counter."

Abhijeet from Tips2trade said, "RVNL stock price was extremely overbought on the Daily charts and hence current price correction is not surprising. A daily close below support of Rs 121 could lead to Rs 108-91 in the near term. Resistance will be at Rs 128."

RVNL is an executing arm of Indian Railways and works for and on behalf of the ministry for projects assigned to it for execution. It works on a turnkey basis and undertakes the full cycle of project development from conceptualisation to commissioning including stages of design, preparation of estimates, calling and award of contracts, project and contract management.