IRCTC shares jump 8%, stock rises 11% in a week; what should investors do?

Shares of IRCTC soared around 8 percent on December 21 on high volumes. Around 2 crore shares changed hands on BSE and National Stock Exchange (NSE) combined, compared to a 1-month average of 80 lakh. The stock has seen a good rally since the company last week announced its plans for major expansion in the non-railway catering business across the country.

“IRCTC is now on the road to proliferate in the areas of business beyond Railways for promoting its brand and business across the nation”, the Mini-Ratna PSU said in a regulatory filing on on December 13. Since then, IRCTC share price has rallied 11 percent. In the same duration, benchmark Nifty 50 has risen 1.5 percent.

At 1:14 pm IRCTC shares were trading 7.4 percent higher at Rs 855.25 on the NSE. On a year-to-date basis, the stock has gained 33 percent, outperforming Nifty 50 which has risen 15 during this period.

The expansion plan has excited investors, according to analysts. Since the last 3–4 months, IRCTC stock has been consolidating in the range of Rs 630–750. Recently, it gave a clean breakout from the said range, which is looking lucrative, said Jigar S Patel of Anand Rathi Shares & Stock Brokers.

“The breakout on a weekly scale looks genuine since it is accompanied by decent volume. Additionally, it has taken out the 1-year-old bear trendline,” he added. On the indicator front, the weekly RSI (relative strength index) has taken out its previous swing high of 60 and is currently placed near 68 levels, Patel said.

IRCTC’s weekly DMI’s (directional movement index) is looking positive, which “confirms our bullish stance in the counter,” Patel said, adding that one can buy in the zone of Rs 800-820 for an upside target of Rs 950 while keeping a stop-loss near Rs 740 on a daily closing basis.

At present, IRCTC is managing catering services for various Ministries, and autonomous bodies including the Judiciary and Universities. It has already set up its hospitality outlets in nine such organisations, including the Department of Telecommunications in New Delhi, Calcutta High Court, and UP Secretariat in Lucknow, among others.

Furthermore, IRCTC has already signed memorandums of understanding (MoUs) with various government bodies including defence establishments such as Border Security Force, Indian Maritime University in Kolkata, and Cotton University, Guwahati.

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