IFCI share price extended its losing run for the second consecutive session on Wednesday, 9 September, due to heavy profit booking after the stock’s recent bull run. A day after crashing almost 10%, IFCI shares crashed more than 4.5% to an intraday low of ₹88.40 on Wednesday. Overall, the stock has lost nearly 14% in just two consecutive sessions.
IFCI shares witnessed a strong bullish run of late amid buzz in the NSE IPO. The company has indirect exposure to the NSE through Stock Holding Corporation of India (SHCIL).
IFCI holds a controlling stake of over 50% in SHCIL, which, in turn, owns more than 4% of NSE. This structure gives IFCI shareholders indirect exposure to developments at India’s largest stock exchange, making the company’s stock particularly responsive to progress on NSE’s much-anticipated IPO.
IFCI share price history
The stock has surged 72% over the last six months, hitting a 52-week high of ₹107.45 on 4 September. It hit a 52-week low of ₹46.20 on 9 December last year.
On a monthly scale, the stock had been in the green from April to August this year, clocking a cumulative gain of 87%.
What should investors do?
As the stock is witnessing some profit booking, some technical experts believe one can use the opportunity to buy the stock.
Vipin Kumar, AVP-Research at Globe Capital Market, said IFCI is displaying a pattern of higher highs and higher lows while holding strong above both its short-term and long-term moving averages.
The ongoing profit-taking from recent all-time highs is likely to find support around ₹80, which serves as the neckline of a previous inverted head-and-shoulders breakout, said Kumar.
“Considering this bullish chart structure, traders can utilise the current dip to accumulate the stock in the ₹78 – ₹82 zone, maintaining a strict stop-loss below ₹68 on a daily closing basis for potential medium-term targets of ₹105 – ₹110. Additionally, volume contraction during this correction suggests healthy consolidation rather than a trend reversal, rendering the risk-to-reward ratio highly favourable for swing traders,” said Kumar.
Aditya Thukral, the founder and analyst at AT Research and Risk Managers, underscored that IFCI has been in an uptrend with the formation of higher highs and higher lows across multiple time frames. However, the stock is experiencing a sharp correction after hitting a fresh 52-week high of ₹107.50. This move seems to end the short-term uptrend, but the long-term uptrend still remains intact.
Thukral added that fresh long entries could only be taken once stock prices cool down to the 100-day EMA reading around ₹76.
According to Thukral, the lower low of ₹68.15 will act as the long-term trend reversal for the stock. As the broader markets are in a bear grip, buying only on dips or closer to higher lows will reward investors, rather than buying breakouts that could retrace back below breakout levels. The stock prices are experiencing a similar situation.
“A short-term correction is underway where short-term investors could use ₹86.25 as the stop losses for their longs. However, it seems the correction could extend towards the 50-day and 100-day EMAs. The fresh buying entries could be taken around ₹76, which are the support levels from 100-day EMA, along with maintaining a stop loss of ₹68.15, which is the higher low of the ongoing long-term uptrend,” said Thukral.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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