IEX Shares Extend Slide to 35% From Peak Amid Market Coupling Overhang: Buy or Avoid?
The Indian Energy Exchange (IEX) has experienced a significant decline as concerns about market coupling loom large. Recently, IEX shares dropped 9% over two trading sessions, reversing a brief rally that saw the stock surge 14%. This rally was sparked when the electricity regulator’s counsel requested time from the Appellate Tribunal for Electricity (APTEL) to consult the Central Electricity Regulatory Commission (CERC) regarding the withdrawal of the controversial market coupling order.
Current Stock Performance
– Recent Decline: The shares fell over 7% on Friday following APTEL’s postponement of the hearing on market coupling norms to January 19, with IEX now down 35% from its peak.
– Moving Averages: The stock is currently trading below its key support levels, with the 50-day and 200-day simple moving averages (SMAs) at Rs 140.8 and Rs 162.5, respectively, according to Trendlyne data.
Expert Recommendations: Buy or Avoid?
Market analysts are advising caution regarding IEX shares:
– Nilesh Jain, a market expert, suggests investors should strictly avoid taking any new positions in IEX stock due to a weak technical chart structure. He identifies support levels at Rs 132 and resistance at Rs 150.
– Anuj Gupta, another technical expert, concurs with Jain, recommending investors steer clear of the stock for now, citing an ongoing weakness in power-related stocks. He sees solid support at Rs 130 and resistance at Rs 160.
Analyst Insights on Market Coupling
– Sandip Sabharwal, a fundamental analyst, posits that a favorable verdict could serve as a significant boost for IEX shares. He believes the stock looks relatively inexpensive compared to competitor exchanges. With the right outcome in court, Sabharwal suggests that potential price increases could follow, especially given previous growth in volumes despite a decline in energy prices.
– Bernstein Research has adopted a cautious stance, reiterating an Underperform rating for IEX. They express concern over ongoing regulatory uncertainties, suggesting that these risks may outweigh operational performance in driving the stock’s value.
Understanding Market Coupling
The July 23, 2025, order from CERC introduced a market coupling mechanism aimed at revolutionizing electricity pricing across power exchanges. The market perceives this change as a threat to IEX’s current dominance in price discovery, liquidity, and trading volume.
Key aspects include:
– CERC’s Clarification: Ahead of the upcoming hearing, the CERC clarified that its July 2025 order should be interpreted as directions, which has further fueled investor apprehension.
– Market Position: Despite holding an impressive 85% market share in the spot power market, IEX faces potential challenges as market coupling redistributes trading volumes among various exchanges.
Conclusion
In summary, IEX shares have experienced a significant decline fueled by market coupling concerns. Experts recommend caution, suggesting a strong avoid signal for new investments. The upcoming decisions from the Appellate Tribunal for Electricity may clarify the future for IEX and its stakeholders. Given the regulatory challenges ahead, careful evaluation is necessary for prospective investors.
(Disclaimer: The recommendations and opinions provided by the experts represent their own views and do not reflect the views of The Economic Times.)