Here is why Indian Energy Exchange shares tumbled 9% towards the end of trade

IEX share price: Shares of Indian Energy Exchange (NSE: IEX) tumbled as much as 9 per cent during the last hour of trade on Thursday after news reports said the Power Ministry has asked the Central Electricity Regulatory Commission (CERC) to introduce the ‘market coupling’ mechanism for spot power trading. At the time of filing this report, shares of IEX had slipped 7.87 per cent to Rs 137 apiece. The stock eventually closed 8.47 per cent lower at Rs 136.10 apiece.

The market coupling mechanism will bring uniformity in power pricing, which, according to Zee Business Research, may impact IEX negatively in terms of dominance and price difference. On the other hand, this will be positive for consumers.

Market coupling is the process where the collected orders from all the power exchanges are aggregated together and then matched to discover a uniform market clearing price. Zee Business Research also stated that this move will allow more exchanges to enter the market, which will increase competition for IEX.

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Brokerage view

ICICI Direct has given a ‘hold’ call on IEX shares for a target of Rs 165 apiece.

"IEX is a structural play on volumes shifting from the long-term PPA market to the spot market. The company has been aggressive in launching new products regularly. However, currently, recovery in volumes is underway, and the intensity of recovery is what we would like to track before turning buyers again given entry valuations are still rich," the brokerage said in its Q4 review report.

IEX share price: Past performance

So far in 2023, shares of the Indian Energy Exchange have declined over 4 per cent against the benchmark’s rise of over 2 per cent. In the past month, the stock has fallen over 15 per cent against the Nifty50’s rise of over 2 per cent.

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