F&O Stock Crashes 13%; Investors Caught Off-Guard!

  • Stock Market Analysis

The last day of the week hasn’t started on a positive note. The benchmark Nifty 50 index is trading 1.08% down at 17,440 by 9:50 AM IST with 10 out of the 11 sectoral indices trading with a cut. 

While many stocks are facing liquidation from investors' portfolios, one stock has specifically come on market participants’ list which has been hammered like anything! The stock is from one of the most prestigious conglomerates in the country - the M&M Group, and the stock is Mahindra and Mahindra (NS: MAHM ) Financial Services Ltd (NS: MMFS ). 

Image Description: Daily chart of M&M Financial Services with volume bars at the bottom

Image Source: Investing.com

The stock crashed to a 10% lower circuit in the opening session and is currently trading at 13.6% lower at INR 192.9. The severe selling pressure in the stock can be witnessed by the fact that the volume for the day so far has already reached 14.3 million shares (in a few minutes) which has already surpassed the highest one-day volume in around 2 months. 

The selling spree in the stock was triggered after the RBI (Reserve Bank of India) ordered the company to stop affiliation with third-party recovery agents to recover loans. The move was called after an unfortunate incident that lead to a killing of a lady during the recovery process by third-party agents.

After the order, investors were taken aback by the intense selling pressure, not giving them a single chance to exit their position, especially in the derivatives market. Slight relief is that, after surpassing the first circuit filter of 10%, the stock didn’t hit the next 15% circuit limit, and was showing some recovery from the lower level. 

Now, the next support seems to be present at around INR 185, which is still a decent travel distance from the current levels. There is absolutely no sign of bottom fishing seen in this stock currently, however a massive fall might lead to some bounce back which is a very common phenomenon. Also, as the stock opened with a gap-down, a recovery might come, although filling the gap is highly unlikely before falling further near the support levels. 

INR 185, being a good support level might not be strong enough to hold the stock from falling further, all thanks to the battered sentiments of investors. Hence, trying to catch a falling knife might not be a good idea for this stock. High-risk and aggressive investors might prefer to wait for some buying confirmation before making an investment decision.

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  • kadar supermarket @kadar supermarket
    i had also invested in the stocks you recommended n now facing heavy losses i can send you my ac number to make adjustment...thanks in advance
    Like 5
    • ram awadhesh @ram awadhesh
      He never told you to invest in his recommendations. He provided his views and recommendations, never recommended to buy or sell his recommendations. You should have done your due diligence and also exited at required SL levels.
      Like 3
    • ram awadhesh @ram awadhesh
      He never told you to invest in his recommendations. He provided his views and recommendations, never recommended to buy or sell his recommendations. You should have done your due diligence and also exited at required SL levels.
      Like 0
    • Jb chandan Chandan @Jb chandan Chandan
      Perfect
      Like 0
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      100
  • Anil Bhai @Anil Bhai
    so nyc
    Like 1

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