IEX shares tumbled 12% on market coupling fears; is it time to exit this stock?

Shares of Indian Energy Exchange (IEX) Ltd slumped on Tuesday amid fears of market coupling, which refers to a uniform market clearing price for buyers and sellers in all exchanges operating in an area. The stock, which scaled its 52-week high of Rs 244.35 in intraday trade, eventually settled 11.56 per cent lower at Rs 211.60. At this price, it has gained 57.91 per cent in past six months and 26.10 per cent on a year-to-date (YTD) basis.

Today's sharp fall came after a news report claimed that market coupling will be implemented by the end of the current fiscal or the beginning of the next fiscal. However, Business Today could not independently verify this information.

A few technical analysts suggested that the counter may slip further. One of them said short-term traders can exit this stock. However, the analyst underscored that IEX's long-term story remains intact.

"IEX is a good stock on a long-term basis. But it has seen a rally in the short term. Since May's expiry level of Rs 136, we have seen continuous week-on-week new higher levels. Technically, the stock has breached all support levels of short- and medium-term moving averages. We may see a profit booking till Rs 180 level. Short-term traders and investors can exit this stock," market expert Kush Ghodasara told Business Today TV.

"The stock has seen a decent uptick in the near term. At present, it has formed a bearish engulfing pattern. For fresh entry, investors should wait for further dips," said Chandan Taparia, Senior VP, Equity Derivatives & Technical, Broking & Distribution at MOFSL.

The counter traded lower than the 5-day, 10-day and 20-day simple moving averages (SMAs) but higher than the 30-day, 50-, 100-, 150-day and 200-day SMAs. The scrip's 14-day relative strength index (RSI) came at 49.92. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the company's stock has a price-to-equity (P/E) ratio of 59.14 against a price-to-book (P/B) value of 22.51. Earnings per share (EPS) stood at 4.05 with a return on equity (RoE) of 38.04.

IEX is engaged in providing an automated trading platform for the physical delivery of electricity, renewables, and certificates. It offers various trade markets, such as the electricity market, green market and certificates.