21 Oct , 2021 By : Kanchan Joshi
Shares of Indian Railway Catering and Tourism Corporation (IRCTC) witnessed a sharp fall in the last two sessions due to which is has slipped over 30% from its record high level of Rs6,393 it hit on Tuesday. However, the stock surged today as it was up over 1% to Rs4,516 apiece on the BSE in Thursday's deals.
“IRCTC has witnessed a sharp fall after hitting a new high where it has lost more than 30% from its all-time high in the last two trading sessions. The fundamentals are still strong for the counter but the valuations have been overstretched," said Santosh Meena, Head of Research, Swastika Investmart Ltd.
IRCTC had entered the primary markets by listing in October 2019 and its stock has delivered stellar return to its shareholders since then. IRCTC shares have rallied more than 210% in 2021 so far whereas it is up near 240% in a year's period.
Technically, the stock is trading near to its 20-DMA of 4400 and Meena said that if it manages to hold this level then a bounce back can be expected. Otherwise, “we can see further downside where 4000-3800 will be a critical demand zone to take fresh buying positions," he suggested.
IRCTC is in a pure monopoly business as it is the only authorized firm to provide online tickets and catering services to the Indian railways. This along with its robust financials as well as a debt-free status had made it a favorite among all kinds of investors.
"Fundamentally the public sector company has very healthy growing books, which were muted during the lockdown due to the railway transport shutdown. There are healthy corrections in any bull run due to profit booking and distribution, and high momentum stocks tend to suffer the most during such times," said Sonam Srivastava, Founder, Wright Research.
IRCTC shares went down over 30% in two days, but it is still up on a MOM basis finding support at 4500.
“As the projection for the long term is favorable, the correction should end sooner or later, and the high momentum stocks would be recovering faster than the market. So the long-term outlook for IRCTC is quite favorable for us, and we, like many on the streets, wish for the cheer to come back during the festive season," Srivastava added.
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