Indian Railway Catering and Tourism Corporation (IRCTC) has lost 32 per cent in just two trading sessions after hitting a record high of Rs 6,396.30 on October 19. The company is a monopoly company in its segment. IRCTC is the only company to which Indian Railways has given the monopoly of catering services, online ticketing, packaged drinking water supply inside railway stations and trains.
The stock has seen a rise of 218 per cent in the last 4 months, with the pace of vaccination picking up, the decline in corona cases and the country moving towards complete lockdown. In Wednesday’s trade, IRCTC saw a decline of 18.5 percent in intraday. At the same time, on Tuesday, it had seen a decline of 16.2 percent from the record high. In the last trading session, the company’s market cap was seen touching the level of Rs 1 lakh crore.
Technical correction visible in IRCTC
Experts say that the fundamentals of this stock still remain strong. The reason for the decline in Ace stock is being overvalued. Keeping this in mind, experts are calling this fall a technical correction. Experts advice to long term investors not to panic and stay in this stock with a long view.
Santosh Meena of Swastika Investmart Says that the fundamentals of this stock still remain strong. But after the steady rise, its valuation had become very expensive. After which the correction was seen in it. This is a technical correction in the stock. The Rs 4,000-3,800 zone will be a strong demand zone for the stock. From here we will get to see new purchases.
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CapitalVia Global Researc Of written written It is said that in the hope of returning the economy to normalcy and getting the most benefit from the unlock, IRCTC shares were seen skyrocketing in recent days. Now a big reversal has come in this trend, considering that we do not recommend to buy in the downtrend or even to accumulate at the current level. Since the company is a monopoly in its segment and has a strong long term outlook, so those who have these shares should stay in it, do not panic and sell.
Mutual funds reduced stake
Mutual funds have reduced their stake in IRCTC from 7.28 per cent in the June 2021 quarter to 4.78 per cent in the September quarter. The names of Nippon Life India Trustee and Aditya Birla Sun Life Trustee do not figure in the company’s September quarter shareholding pattern.
Foreign portfolio investors have also reduced their stake in the company from 7.82 per cent in the June 2021 quarter to 8.07 per cent in the September quarter. But in the same period, LIC has increased its stake in the company from 1.9 per cent to 2.11 per cent. Individual investors with holdings of less than Rs 2 lakh during this period have increased their stake from 11.26 per cent to 14.17 per cent. But high net worth investors have reduced their stake from 0.22 per cent to 0.14 per cent.
Selling pressure across the broader market
In fact, the entire mid and small cap space, which has shown huge gains so far, is witnessing a massive sell-off. BSE Midcap and Smallcap have gained 19 and 17 per cent in the last two months. After this, it was natural for the correction to come and yesterday we saw the beginning of this correction. BSE Midcap and Smallcap have lost 3.3 and 3.6 per cent in just two trading sessions.
Sneha Poddar of Motilal Oswal Financial Services It says that after the strong rally of midcaps and smallcaps, the valuations of the shares became unusually expensive, due to which we have seen this profit recovery. If we leave out some very expensive names, this correction is giving us an opportunity to buy good stocks. The outlook for the market looks good going forward due to the easing of restrictions imposed due to COVID, spurt in economic activity, the enthusiasm of the festive season and pick-up in demand.
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