Polycab India shares dive 9% on tax evasion reports; here's what technical charts indicate

Shares of Polycab India Ltd fell sharply in Tuesday's trade amid reports of tax evasion. The stock slumped 9.26 per cent to hit a day low of Rs 4,850. On BSE, around 2.44 lakh shares were changing hands today. The figure was way more than the two-week average volume of 16,000 shares. Turnover on the counter stood at Rs 122.70, commanding a market capitalisation (m-cap) of Rs 73,101.06 crore.

In December last year, the income tax (I-T) department had carried out searches at some of the premises and plants related to the company. "We hereby inform you that the I-T dept officials have concluded their search operations on December 30, 2023. The company has fully cooperated with the officials of I-T dept during the proceedings and responded to the clarifications and details sought by them. It will promptly keep the exchanges informed of outcome from the above search operations upon receipt of the same from I-T dept," Polycab stated in an exchange filing.

Market expert Ravi Singh said the stock plunged today due to tax evasion reports. Polycab is currently looking weak on daily charts and may slip up to Rs 4,500 level in the near term. Strong resistance will be at Rs 5,000, he mentioned.

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 4,600 and resistance at Rs 5,000. A decisive close Rs 4,800 level may trigger a further downside till Rs 4,500. Expected trading range will be between Rs 4,500 and Rs 5,000 for a month."

AR Ramachandran from Tips2trades said, "Polycab India is bearish but also oversold on daily charts with next support at Rs 4,798. Investors should buy only if a daily close is above resistance of Rs 5,015. Next support below Rs 4,798 will be at Rs 4,496."

The counter was trading lower than the 5-day, 10-, 20-, 30-, 50- and 100-day simple moving averages (SMAs) but higher than the 150-day and 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 28.19. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 48.79 against a price-to-book (P/B) value of 11.15.

Polycab is yet to issue an official statement on reports of tax evasion.

The company is the country's largest manufacturer of wires and cables. Polycab's business operations span across India through 23 manufacturing facilities, 15-plus offices and 25-plus warehouses.

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

Also read | Tiger Logistics shares jump 6% to hit new high as co announces stock split

Also read | Hot stocks on January 9: YES Bank, Alok Textiles, Zee Entertainment, Capacite Infraprojects and more