 "Bear market, Stock market")
Shares of Indian Energy Exchange (IEX) hit a 52-week low of Rs 116, freezing at the 15 per cent lower circuit on the National Stock Exchange (NSE) in Friday’s intra-day trade on reports that the Power Ministry has directed the Central Electricity Regulatory Commission (CERC) to implement the process of market coupling in a timely manner.
The stock of the country’s premier energy exchange has tanked 22 per cent in past two trading days. In past one week, it has slipped 24 per cent, as compared to 0.8 per cent rise in the Nifty 50. The stock fell below its previous low of Rs 125.75, touched on March 29, 2023.
Till 09:33 AM; a combined 12 million equity shares changed hands on the NSE and BSE. The stock trades in futures & options (F&O) segment and hence does not have any circuit limits.
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.
IEX is a market leader and has the highest volumes in terms of power trading. This will dry up volumes in a significant manner for IEX among other power trading platforms and snatch away the moat of creating liquidity and price discovery by IEX, ICICI Securities said in a note.
IEX is India’s premier energy exchange providing a nationwide, automated trading platform for physical delivery of electricity, renewable energy and certificates including renewable energy certificates as well as the energy saving certificates. The exchange platform enables efficient price discovery and increases the accessibility and transparency of the energy market in India while also enhancing the speed and efficiency of trade execution.
Meanwhile, IEX on Monday said the total trade volume of the Indian Energy Exchange grew by 8 per cent year-on-year to 8,251 million units (MU) in May.
The average spot power price during May 2023 was 30 per cent lower at Rs 4.74 per unit against Rs 6.76 per unit in May 2022, due to an improving supply-side scenario, leading to increased liquidity, and cooler weather conditions.
While an increase in power demand is expected in the coming months, the supply-side liquidity is likely to further improve due to enhanced coal supply, reduction in e-auction coal prices and consistently declining imported coal and gas prices, IEX said.
Technical View
Bias: Negative
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Target: Rs 100
Resistance: Rs 132
Given the sharp fall in the stock, select momentum oscillators like the DI (Directional Index) and MACD have turned bearish, while the RSI (Relative Strength Index) has entered oversold zone.
Thus, the stock may see some pullback, but the upside may be capped around Rs 132-level in the near term. The bias to turn favourable the stock will need to cross and sustain above Rs 132 level.
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On the downside, the stock can potentially fall to Rs 100 levels.
(With inputs from Rex Cano)
