The shares of the Indian Energy Exchange (IEX) fell by over 12% after a media report suggested that market coupling—a process aimed at establishing a uniform market clearing price for buyers and sellers across exchanges—could be implemented by the end of the current fiscal year or early next fiscal. The market reacted swiftly to this development, reflecting concerns about its impact on IEX’s operations.
Key market impact and performance
On Tuesday, IEX stock experienced a sharp decline, hitting an intraday low of ₹209.40, marking a 12.47% drop from its previous close of ₹239.25 on the BSE. Approximately 40.53 lakh shares were traded, resulting in a turnover of ₹89.59 crore. The company's market capitalisation also took a hit, falling to ₹19,195 crore.
Earlier in the session, IEX shares had reached a 52-week high of ₹244.35. However, with today’s losses, the stock plummeted 14.30% from this peak, making it the top loser on the BSE.
Technical indicators and volatility
IEX's technical indicators highlight the stock’s current instability. The Relative Strength Index (RSI) stands at 79.8, signalling that the stock is trading in the overbought zone. Additionally, IEX has a beta of 1.4, which reflects its high volatility over the past year. While the stock is trading below its 5-day, 10-day, and 20-day moving averages, it remains above its 30-day, 50-day, 100-day, 150-day, and 200-day averages.
Power ministry’s pilot study and its impact
The Power Ministry has instructed the Grid Controller of India to expedite the pilot study on market coupling. This study is being conducted under the supervision of the Central Electricity Regulatory Commission (CERC), which is pushing for the timely implementation of the process.
Earlier in June 2023, IEX had witnessed a 10% dip when the Power Ministry urged CERC to ensure the market coupling process proceeds as planned. This new development has further intensified concerns within the share market investment community.
What is market coupling?
Market coupling refers to the formation of a single government-owned power trading entity. This entity would oversee price discovery and dispatch power to short-term trading platforms, including IEX. Analysts fear this move could significantly reduce volumes for IEX, the market leader in power trading.
Indian Energy Exchange: A market leader
IEX offers an automated trading platform for the physical delivery of electricity, renewables, and certificates. Its offerings include the electricity market (day-ahead, term-ahead, and real-time trading), a green market (for renewable energy trading), and certificates.
Key takeaways
As investors navigate this latest development, the impact on share market investment strategies for IEX remains to be seen.
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