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IRCTC Share Price Uptrend Faces Renewed Resistance

The IRCTC share price declined by the widest margin in two weeks on Friday, shedding 1.21 percent to trade at Rs 1043.55. Nonetheless, the share price remains on the uptrend, with gains of 5.2 percent in the last two weeks. That said, however, a daily decline of 1.2 percent is costly for a stock whose daily gains in the last two weeks have mostly been below 1.5 percent. Nonetheless, most holders of the Indian Railways Catering and Tourism Corporation (IRCTC) shares over the last month are in profit, considering that the shares have gained more than 12 percent since the beginning of April.

A week ago, IRCTC announced that it was setting up over 150 affordable meal counters spread across more than 100 railway stations in India. This is a diversification strategy aimed at leveraging the surging passage traffic numbers by creating a new revenue stream to cover for revenue lost through unreserved coaches. Furthermore, it caters for a broad spectrum of customers, with “economy” meals costing Rs 20 and “snack” meals available for Rs 30. According to IRCTC, the service proved a success with the pilot 51 stations launched last year and will be expanded progressively to cover more stations.  

A look at the trends in the trading of IRCTC shares shows that futures open interest positions are up by 2 percent as of this writing, while futures price have declined by 1.3 percent. This diversion signals that many investors are betting against the stock, and this could lead to a price decline in the coming days.  However, a look at the trading volume shows that 2.09 million shares were traded in the last 24 hours compared to 3.7 million on Wednesday.  Therefore, the decline in trading volume in the face of a declining share price is a strong indicator that the decline in the share price is likely to be limited, as only a few shares are being sold.

Technical analysis

The IRCTC share price pivots at 1053.75, and the momentum is largely neutral. If resistance persists at that level, the sellers could pull the price to the support at 1043.45. A continuation of control by the sellers could break the support and potentially move the price lower to test 1031.45. On the other hand, buyers will likely be in control if the price action stays above that level. That could enable them to target the resistance at 1064.65, beyond which they could build the momentum to test 1077.15 in extension.