Zomato shares dive 5% after tax notice; check key technical levels

Shares of Zomato Ltd fell sharply in Thursday's trade after the online food aggregator received a show cause notice from the Directorate General of GST Intelligence, Pune Zonal unit. The show cause notice issued to Zomato asked the Gurugram-based company to respond to why it hasn't paid an alleged tax liability of nearly Rs 402 crore, along with the interest and penalty.

The stock today plunged 5 per cent to hit a day low price of Rs 120.70. At this price, the scrip has slipped 8.39 per cent from its one-year high of Rs 131.75, a level seen this month on December 19. Despite the mentioned fall, the multibagger counter has gained 172.15 per cent from its 52-week low of Rs 44.35, hit on  January 25 earlier this year.

On technical charts, support on the counter could be seen around Rs 115 level. On the higher side, a decisive close above Rs 130 can only trigger next round of rally.

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "Zomato has been hovering in the cycle of higher highs – higher lows on a broader time frame. The stock is likely to witness in-between blips, but till it sustains the zone of Rs 115-112, there is no sign of caution in the counter. On the higher end, Rs 130 is likely to act as an immediate hurdle and a decisive surge could only trigger the next leg of rally in the near period."

Jigar S Patel, Senior Manager - Technical Research at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 114 and resistance at Rs 130. Expected trading range will be between Rs 105 and Rs 140 for a month."

DRS Finvest founder Ravi Singh said, "The stock is looking weak and may slip towards Rs 105. Immediate resistance may be found at the Rs 132 zone."

The counter was trading lower than the 5-day and 10-day simple moving averages (SMAs) but higher than the 20-day, 30-, 50-, 100-, 150- and 200-day SMAs. The counter's 14-day relative strength index (RSI) came at 51.94. 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 131.03 against a price-to-book (P/B) value of 5.05.

On BSE, around 51.08 lakh shares were seen changing hands. The figure was higher than the two-week average volume of 38.31 lakh shares. Turnover on the counter came at Rs 63.03 crore, commanding a market capitalisation of Rs 1,07,144.26 crore.

(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.)

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