This small-cap jewellery stock tumbled 19% on Dhanteras. Here is why

Jewellery stocks usually perform well on Dhanteras as the festival is considered an auspicious time to purchase or invest in precious metals. But, this was not the case with shares of Senco Gold Ltd this year. The small-cap counter saw a sharp downtick in Tuesday's trade, sliding 19.10 per cent to hit a day low of Rs 981.30. The scrip regained some lost ground as the session progressed and was last seen trading 5.12 per cent lower at Rs 1,150.90.

Today's fall in the share price came after a few reports claimed a 'raid' was conducted at the company's or promoter's premises. In response, Senco refuted the claims as "market rumour."

"This is with reference to certain news/messages circulating in the social media and other places regarding a possible raid at company’s/ its Promoter’s premises. With respect to the above, we would like to clarify that the said news/messages are rumours and speculative in nature and we would like to categorically state that the information mentioned is inaccurate as no such event has taken place," the company clarified.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said, "Senco has been in a consolidation phase after a stellar run. An increase in gold prices can impact its sales in the medium- to short-term."

Investors with a long-term view can hold on to the stock as jewellery retail companies are expected to do well despite high gold prices, Bathini added.

Technically, support on the counter could be seen in the Rs 980-1,035 range. And, immediate resistance may be found at Rs 1,100.

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "Senco has been experiencing a series of higher highs and higher lows on a broader timeframe. Currently, support placed at the Rs 1,000 and 980 zone appears strong. Sustaining prices above this range could lead to a continuation of its primary trend."

Kushal Gandhi, Technical Analyst at StoxBox, said, "We recommend buying the stock with a target price of Rs 1,215 while maintaining a strict stop loss at Rs 1,035."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi, said, "Support will be Rs 1,008 and resistance Rs 1,100. A decisive move above Rs 1,100 level can trigger a further upside towards Rs 1,150. The expected trading range will be between Rs 1,000 and Rs 1,150 for the short term."

As of September 2024, promoters held a 67.47 per cent stake in the company.