Nightmare for Investors: F&O Stock Nosedives 20% at Opening!

  • Stock Market Analysis

The recently concluded 50th GST Counsil imposed a heavy 28% GST on online gaming and casinos which has taken the entire industry to a tailspin. One stock that has been severely impacted by such a decision is the casino operator - Delta Corp Ltd (NS: DELT ), having a market capitalization of INR 6,605 crores.

The company crossed a milestone of INR 1,000 crore in revenue in FY23 for the first time and consequently reported a profit of INR 261.37 crores, a massive 290.1% YoY jump. This robust performance translates into a hefty profit margin of 24.47%. However, this kind of performance has now become seemingly unsustainable, at least in the near future after the imposition of 28% GST on the casino business.

Image Description: Daily chart of Delta Corp with volume bars at the bottom

Image Source: Investing.com

Reacting to the news, the stock tanked vertically and hit a 20% lower circuit at INR 197.4, by 10:38 AM IST. The selling spree is so sharp, that even the volume pick-up is not there yet, all thanks to negligible count of buyers. As of writing, a total of 1.11 million shares have exchanged hands so far, which is significantly less than the 10-day average of 2.63 million.

Generally, if a stock falls on a lesser volume, the trend is not considered sustainable. However, in this case, the volume is low because of lower circuits which is the epitome of the strength of a downtrend.

Now the question is what is to be done? Those looking to catch a falling knife should wait for a slow-down of this intense selling pressure. There is a demand zone around INR 175 which is still far but seems a relatively low-risk level for those still having confidence in this casino operator.

Short-selling opportunities are not there anymore, strictly from a risk-to-reward perspective. It might sound contradictory that the stock could still fall to INR 175 but at the CMP of INR 197.4, no shorts are recommended. However, trading is not just about the direction, managing the risk is equally important (if not more).

Also, if the stock shows any reversal sign such as a bullish candlestick pattern, even then a low-risk long entry could be explored.

Read More: What is ‘Dabba Trading’ & Why You Should Avoid it!

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  • azaruden MSA @azaruden MSA
    any banknifty analysis call provide support me
    Like 0
  • vikram vasudeva @vikram vasudeva
    A 28% tax on total bet is unsustainable. You have to pay Rs 128 to bet Rs 100. I think it will break 175
    Like 0
    • Aayush Khanna @Aayush Khanna
      By paying 128, you can bet 92.1 not 100.
      Like 0
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  • SAMIR LOYA @SAMIR LOYA
    PLEASE ADD GIFT NIFTY IN SCRIPT
    Like 3
    • Aayush Khanna @Aayush Khanna
      Hi Samir, it's one of the things we are working on.
      Like 1
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  • Paritosh Sonekar @Paritosh Sonekar
    what to do with the holding, unable to sell, GTT triggered but still not executed.
    Like 0
    • Aayush Khanna @Aayush Khanna
      Hi Paritosh, you need to contact your broker for this issue.
      Like 0
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  • Jerry MP @Jerry MP
    so enter at 175? with a strict SL?
    Like 4

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