IndiGo’s stock crashes! Buy, Hold, or Sell going ahead?

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The price of IndiGo shares tanked more than 4% in early trade on 16th August, Thursday after a block deal in the equity shares of the company took place on exchanges. IndiGo shares declined as much as 4.84% to ₹2,425.00 apiece on the BSE.

IndiGo’s co-founder Rakesh Gangwal and his family are likely to sell shares worth Rs 3,730 crore ($45 million) through block deal. Gangwal family has offered around 15.6 million shares on the block, or around 4 per cent stake in the airline, at a floor price of Rs 2,400 per share, as per report. 

The block deal is part of Gangwal’s plans to cut down on his stake in InterGlobe Aviation, which is one of India’s largest airline IndiGo. Morgan Stanley, JP Morgan, and Goldman Sachs are the bankers for the block deal.

In 2022, Gangwal, who holds more than 29.72% stake in the company had stepped down from the company’s board membership. In September 2022, Gangwal sold 2.8% in the airline for Rs.2,000 crore and in February, they sold another 4% stake for Rs.2,900 crores.

Two Cents From Bajaj Broking Research Team

Current Market Scenario: The stock has encountered an 11% descent from its recent peak and is presently positioned in proximity to its support zone. In addition, the weekly Relative Strength Index (RSI) stands at 69, while the stock remains close to its prior breakout level. 

Significance of Support Zone Proximity: The stock’s close proximity to the support zone is indicative of a potential juncture where heightened buying interest may arise. This could potentially result in a reversal of the ongoing downward trajectory. 

Insight from RSI Indicators: The daily RSI has exhibited an upward shift from its oversold region, registering at 42. This movement implies that the stock potentially has room for further upward mobility. This observation, in conjunction with the stock’s nearness to its previous breakout range, indicates a favorable opportunity for prospective buyers.

Investments in the securities market are subject to market risk, read all related documents carefully before investing.

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