IEX crashes nearly 30% after market coupling nod: Technical analysts see no floor yet
ADVERTISEMENT The move has raised fresh concerns about IEX's future market dominance and its core revenue model.
Late Wednesday, the CERC said it would initiate market coupling in a phased manner, starting with the Day-Ahead Market (DAM). The mechanism aims to unify price discovery across multiple power exchanges by pooling bids and clearing them centrally, a structural shift that could dilute IEX's competitive edge and impact its transaction charges, which currently form a major part of its revenue.
While the move is expected to improve efficiency and reduce regional price disparities, it threatens the liquidity moat that IEX has built over the years.Bernstein called the development 'as bad as it gets' for IEX, cutting its target price to Rs 122 and maintaining a 'Market-Perform' rating. 'With the moat of liquidity gone, the only way to compete is transaction charge,' the firm noted.
ADVERTISEMENT In contrast, UBS retained a 'Buy' call with a target of Rs 285, terming the news a 'negative surprise' but pointing out that the Grid-India report suggested only a 0.01–0.3% impact in terms of savings or volumes cleared. UBS added that the real-time market (RTM), which accounts for 30% of IEX revenue, remains unaffected for now.Technical analysts see no signs of recovery in the near term.
ADVERTISEMENT Kunal Kamble, Senior Technical Research Analyst at Bonanza Portfolio, said the stock has broken down from a double top formation with a breakaway gap, confirming a bearish reversal. 'The price has slipped below all major EMAs, and the RSI has plunged to 14 — an extremely oversold condition. The directional movement index (DMI) also confirms strong selling pressure,' he noted.Hardik Matalia, Derivative Analyst at Choice Broking, echoed the caution: 'IEX breached key support zones with high volume. RSI at 17.68 shows relentless selling, and unless the price reclaims key averages with volume support, any bounce should be seen as an exit opportunity.'
ADVERTISEMENT Both analysts advised traders and investors to avoid fresh long positions at current levels and wait for further clarity on the regulatory impact.Adding to the complexity, IEX reported strong Q1 results after market hours on Thursday, July 24. The company posted a 25% year-on-year jump in consolidated net profit to Rs 120 crore for the quarter ended June 2025. Revenue rose 19% to Rs 184.2 crore.
ADVERTISEMENT Electricity volumes grew 14.9% YoY to 32.4 billion units, and Renewable Energy Certificate (REC) trading surged 149.3% to 52.7 lakh units. However, lower power demand, due to early monsoons and unseasonal rains, kept prices subdued in both DAM and RTM segments.The Day-Ahead Market saw a 45.2% YoY rise in supply liquidity, driving down average price per unit by 16% to Rs 4.41. In the Real-Time Market, prices fell 20% to Rs 3.91/unit.Despite the operational beat, the regulatory uncertainty weighed heavier on investor sentiment.With CERC's market coupling framework set to be rolled out over the next 18 months, analysts expect continued volatility in IEX's stock. While the Q1 performance highlights strong fundamentals, the long-term implications of losing pricing control and volume leadership in key market segments are keeping investors on edge.
Also read: IEX Q1 Results: Cons PAT jumps 25% YoY to Rs 120 crore, revenue rises 19%
Until clarity emerges on how the new framework will impact exchange dynamics, technical experts believe any recovery may be short-lived.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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