Why is Steel Exchange falling/rising?

Recent Price Movement and Market Comparison

On 17 Dec, Steel Exchange India Ltd closed at ₹7.96, down by ₹0.11 or 1.36% from the previous session. This decline continues a two-day losing streak, during which the stock has fallen by approximately 2.45%. The stock’s underperformance is further highlighted by its comparison to the broader Sensex index, which recorded a modest gain of 0.20% over the past week, while Steel Exchange’s shares declined by 2.81% in the same period.

Over the past month, the stock has shed over 10%, significantly underperforming the Sensex’s marginal decline of 0.46%. The year-to-date figures reveal a more pronounced disparity, with Steel Exchange down 22.11%, whereas the Sensex has gained 8.22%. This divergence underscores the stock’s struggles amid a generally positive market environment.

Technical Indicators and Investor Participation

Technical analysis reveals that Steel Exchange is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages. This consistent positioning below moving averages typically signals bearish momentum and may deter short-term traders and investors from entering or holding positions.

Investor participation has also waned, as evidenced by a 27.97% drop in delivery volume on 16 Dec compared to the five-day average. The delivery volume stood at 4.35 lakh shares, indicating reduced conviction among investors to hold the stock beyond intraday trading. Such a decline in investor engagement often exacerbates downward price pressure.

Despite these challenges, the stock maintains sufficient liquidity, with the average traded value supporting trade sizes of approximately ₹0.02 crore, ensuring that market participants can transact without significant price impact.

Long-Term Performance Context

Examining Steel Exchange’s longer-term returns paints a sobering picture. Over the past year, the stock has declined by 28.09%, while the Sensex has appreciated by 4.80%. The three-year performance gap is even more pronounced, with Steel Exchange down 46.61% compared to the Sensex’s robust 37.86% gain. However, over a five-year horizon, the stock has delivered a cumulative return of 105.42%, slightly outperforming the Sensex’s 80.33% gain. This suggests that while the company has demonstrated strong growth in the distant past, recent years have been challenging, leading to significant underperformance.

Summary of Factors Driving the Decline

The recent decline in Steel Exchange’s share price can be attributed to a combination of factors. The stock’s consistent underperformance relative to the Sensex and its sector peers has likely dampened investor enthusiasm. The technical weakness, with the price trading below all major moving averages, signals a lack of upward momentum. Additionally, the notable drop in delivery volumes suggests waning investor confidence and reduced buying interest.

While liquidity remains adequate, the prevailing negative sentiment and poor short-term returns have contributed to the stock’s downward trajectory. Investors appear cautious, possibly awaiting clearer signs of a turnaround or improved fundamentals before committing capital.

In conclusion, as of 17 Dec, Steel Exchange India Ltd’s stock is experiencing a decline driven by weak relative performance, technical bearishness, and diminished investor participation, all of which combine to exert downward pressure on the share price.

Get 2 full years of MojoOne Premium for only Rs. 12,999. Subscribe for 1 year and we'll add another year FREE. Offer valid for a limited time. Start Saving Now →