As the broader markets are trading at around all-time highs, it might be difficult to look for stocks that are still trading at their respective lows. The recently-battered Indian Indian Energy Exchange Ltd (NS:IIAN) is among such counters that is now attempting to pare some of the losses.
It is a power trading exchange with a market capitalization of INR 10,911 crore and trades at a TTM P/E ratio of 34.91. The company’s near-monopoly status was ended overnight by the government’s decision to bring forward a market-coupling mechanism, after which the stock nosedived in the month of June 2023.
In Q1 FY24, the company reported a 13.2% YoY jump in revenue to INR 128.99 crore while the net income increased 9.6% to INR 75.82 crore. Although the earnings report didn’t discount the whole effect of this new mechanism as it was introduced in June 2023, FIIs have already started trimming down their stake, from 17.88% in March 2023 to 17.28% in June 2023.
Image Description: Daily chart of IEX with volume bars at the bottom
Image Source: Investing.com
Nonetheless, the stock seems to have hit rock bottom, and hunting for long opportunities from these beaten-down levels might prove to be more fruitful than trying to look for short-selling opportunities.
Despite a lackluster performance of the broader markets, the share price of IEX rallied 3.87% to INR 127.4 and surged past its falling trendline resistance on the daily time frame. This breakout can be deemed as an early indication of bears finally starting to lose the battle which could eventually lead the prices to go up.
The volume on today’s breakout day was also high, at over 25.7 million shares on the NSE, which is over 403% higher than the 10-day average volume of 5.1 million shares. That’s above the threshold limit of 300% which I prefer on any breakout day.
As the stock is already coming out from oversold levels, the upside could be decent. The first level that long holders should eye is around INR 132.5 and then to INR 135.5 which is where the stock would close the gap being left open amid a 10.1% fall on 9 June 2023.
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