IEX shares: Market coupling, two other factors to affect stock of energy trading platform

Shares of Indian Energy Exchange (IEX) are likely to face near-term headwinds from three factors which are i) Implementation of market coupling, ii) high power price-driven shift in power volumes away from spot market to longer-duration instruments, iii) rising competition.

While mentioning the above factors, Nuvama Institutional Equities has maintained a 'REDUCE/SU' stance on the stock with an unchanged target price of Rs 127.

The brokerage's views come after the IEX stock slipped 9% in the last 30 minutes of trade on Thursday. The sudden crash occurred amid reports that said the power ministry has directed Central Electricity Regulatory Commission (CERC) to implement the process of market coupling in a timely manner.  

"Currently, IEX is the most trusted platform for electricity spot price determination in  India, which  is its business moat. However, introduction of a full-fledged market coupler implies an independent third-party will collate all buy/sell bids and derive a uniform market price across all exchanges. This potentially negates IEX's 'moat' as other exchanges can eat into its market share over time," said Nuvama in a note.

Watch: IEX shares in a free fall, tank another 15% to fresh 52-week low; what's dragging the stock, and should you buy?

In Thursday's trade, IEX stock hit an intraday low of Rs 135.40, down 8.97% against the previous close of Rs 148.75 on BSE. Later, the stock closed 8.24% lower at Rs 136.50 on BSE.  

In terms of technicals, the relative strength index (RSI) of IEX stands at 36.8, signaling it's trading neither in the overbought nor in the oversold zone. The stock has a beta of 1, indicating low volatility in a year. IEX shares are trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.  

Total 22.95 lakh shares of the firm changed hands amounting to a turnover of Rs 32.32 crore on BSE. Market cap of the firm fell to Rs 12,266 crore

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