Shares of state-run Indian Railway Finance Corporation (IRFC) handed investors a jolt on Wednesday, sliding as much as 5.40% in their sharpest fall of June. Within minutes of the opening bell, the stock slipped from a high of 98.96 to the 93.35 level. What made the move stand out was the timing: on the very day the Sensex was up more than 600 points and holding firmly in the green, IRFC was moving in exactly the opposite direction.
Weak Sentiment Showing Up on the Charts
Instead of riding the broader rally, the railway stock broke away and flashed clear signs of weakness on the charts. An analyst had earlier flagged that the stock could eventually drift toward the 92 range. If it fails to find fresh momentum from here, the odds of a slip below the 90 zone stay high. Back at the end of March, the same stock had sunk to a yearly low of 87 amid the US-Iran conflict.
Here Is What Dragged IRFC Down
IRFC is a state-run arm of the railways, with the government holding a large stake in the company. Early this year, the government announced an 'Offer for Sale' (OFS), planning to offload 1% of its holding at a floor price of 91. The move lifts the stock's free float and liquidity, while the disinvestment push gives retail investors a chance to pick up the shares. Because the price sits below 100, IRFC remains a firm favourite among the large retail crowd.
Under the OFS, the government plans to sell 13.06 crore IRFC shares, with an option to offload another 1%, or a further 13.06 crore shares. It is this selling pressure that pushed the railway heavyweight into its steep slide. The correction is being seen as normal and could settle down once the OFS is fully completed. Accumulating the stock at these levels, or buying the dips in the 80-plus range, could prove rewarding, and the chances of a bounce after the settlement wraps up look strong.
