Strategic Offloading by Shareholders Leads to Price Decline, with Potential Rebound Expected
Coal India, the state-owned coal mining company, has experienced a significant decline in its share price for the fourth consecutive day. The stock witnessed heavy sell-off pressure following the announcement of an offer for sale (OFS) at a discounted price, prompting shareholders to offload their positions. This strategic move has contributed to the current downward trend.
On Thursday, Coal India’s share price opened lower and hit an intraday low of ₹229.55 apiece levels on the National Stock Exchange (NSE), marking a 4.80 percent intraday dip. The company’s shares have been under pressure since the OFS announcement on Tuesday, which offered shares at a discounted price of ₹225 per share.
Market experts suggest that the decline in Coal India’s share price is primarily a result of shareholders offloading their positions in anticipation of buying shares at a lower price through the OFS. This move is seen as a strategic decision rather than reflecting any fundamental flaws within the company.
Saurabh Jain, Vice President of Research at SMC Global Securities, explained, “Coal India shares are falling for the last four sessions as the PSU company has announced OFS at ₹225 per share, which was much lower than the market price of the scrip. So, this selling is more strategic as shareholders are offloading their positions to subscribe at a lower price offered by the PSU. We may see a strong rebound in Coal India’s share price after the close of its OFS.”
Offering a more optimistic outlook, Sumeet Bagadia, Executive Director at Choice Broking, advised investors to consider bottom fishing in Coal India shares. Bagadia emphasized that the stock has strong support at ₹210 apiece levels and recommended buying within the ₹220 to ₹230 range while maintaining a stop loss at ₹210 per share. Bagadia believes that Coal India shares have the potential to bounce back strongly, reaching levels of ₹250 to ₹260 apiece in the short term.
The Coal India OFS opened today and will remain open for subscription until June 2, 2023. With the offer price set at ₹225 apiece, which is still below the current market price of around ₹230 apiece, it remains to be seen how investors will respond to this opportunity to acquire shares at a discounted rate.
Investors and market participants are eagerly awaiting the conclusion of the OFS to gauge the potential impact on Coal India’s share price. While the current decline is largely attributed to the strategic offloading by existing shareholders, a strong rebound is anticipated once the OFS is closed, leading to renewed investor interest in the company.
