Delta Corp shares dive 24% in two days. Key support and resistance levels to watch

Delta Corp shares continued to decline in Tuesday's trade as it tumbled another 6 per cent to hit a new 52-week low. The stock has been reeling under pressure following a tax notice from the Directorate General of GST. However, the stock saw some low-level buying.

In the last two sessions, the stock has plunged 24 per cent to Rs 134.55. The stock has almost halved its value from its 52-week high at Rs 259.95, hit a year ago. The stock was hovering around Rs 335 in April 2022 and has now corrected about 60 per cent from those levels.

Delta Corp had recently received tax notices amounting to Rs 16,822 crore from the Directorate General of GST Intelligence. Citing its stand through exchange filings, Delta Corp said that the amount claimed in the DG Notice is based on the gross bet value of all games played at the casinos during the given period.

Technical experts suggest investors to avoid any adventure in Delta Corp shares considering the negative newsflow. Reading the charts, they anticipate more weakness in the stock. On the indicator front, the monthly MACD has made a negative cross near the zero line, which hints towards negative bias in the counter in the next few sessions, said the experts.

On a monthly scale, Delta Corp is looking weak. At the current juncture, the said counter is near support of Rs 140 and if this level is taken out, then we may see Rs 120 in the short term. On Flip-side resistance is seen near Rs 160, followed by Rs 180, said Jigar S Patel, Senior Manager - Technical Research Analyst, Anand Rathi Shares and Stock Brokers.

Delta Corp as seen on its monthly chart has witnessed a breakdown from its support zone of Rs 173-162 levels with huge volumes. The stock on its daily chart has seen two major cracks with high volumes, forming a downward flag pattern, said Sujit Deodhar, Head Technical Analyst at Wellworth Share & Stock Broking.
 

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A retracement drawn from the highs of Rs 141.90 in the month November 2010 to the lows of Rs 39.05 in the month March 2013, unfolds the demand & supply zone for this stock. It can be observed that the stock had a strong rally post March 2020, from the lows of Rs 53 to the levels of Rs 339 and a steep fall was followed by, he said.

"Traders should have an approach of sell on rise for this stock, as the downward trend is in place for a shorter & longer time frame too. For investors, this should be a wait and watch period till the stock approaches the demand zone of Rs 116-78 levels, where it should ideally stabilize and consolidate for some time, to make itself an attractive buy," Deodhar added.

Seasoned investor Ashish Rameshchandra Kacholia sold 15 lakh equity shares on Monday via open market at an average price of Rs 144.65 via bulk deals.  Kacholia was not among shareholders with over 1 per cent stake in the casino operator as per June 2023 quarter data. There is no history of Kacholia owning a significant stake in Delta Corp earlier too.

In an interview with Business Today TV, Sudeep Shah, Head, Tech & Derivatives Research at SBI Securities gave a strict word of caution for Delta Corp. "For now, stay away from the stock. It is headed downwards," he warned investors who wished to catch the falling knives.

Avdhut Bagkar, Derivatives & Technical Research at StoxBox also has a word of caution of daredevils at Dalal Street who want to punt and play with Delta Corp. "With the gap-down close on Monday, the stock has entered a bearish trap with the Relative Strength hitting oversold territory," he said.

From now on, Rs 170 becomes the critical hurdle where more sell-offs could emerge. The stock is slipping towards Rs 115 to Rs 100 levels. Death cross has fuelled more bearishness in the stock, posing a cautious outlook for the short-to-medium term, said Bagkar.

SWOT analysis is very important to analyze the survival probability of a business. As of now, the Indian Government is getting a bit more strict about the gaming, casino, lottery, and crypto segments. Increased GST and non-supportive approach is not favorable for these businesses, added the experts.

Delta Corp, the only listed casino player in India, commands a total market capitalization of just little more than Rs 3,700 crore and its has been served notice tax manifold of its total mcap.  It is a big concern as to how it could pay taxes more than is market worth. Thus, its survival is under scrutiny, said VLA Ambala from Stock Market Today.

"Price movement and technicals are also suggesting to stay away from it until this industry gets some concrete relief from the Government. If there is anything contrary to it means a caution is needed.  When it comes to technical charts it may be lucrative as it's showing an oversold zone and a 'deep dip' but one should stay away from a falling knife' she strongly suggested.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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