A Sharp Rise and a Sharp Fall
Indian Energy Exchange stock saw a very big move in the last few years. From around ₹40, it went up to almost ₹310 between 2020 and 2022.
Many investors were excited when they saw this strong rally. But after touching those high levels, the stock crashed badly. It fell close to ₹110. Later, it moved up again near ₹220–230, and now it is again trading around ₹122–123. This kind of up and down move shows that the stock has been very unstable.
Long Term Trend Is Weak
If we look at the long term chart of Indian Energy Exchange, the trend line has clearly broken down. The stock has gone below its 200 DMA many times during the fall. In fact, it has been trading below the 200 DMA for almost three years now. There were one or two small spikes in between, but there is no clear structure for a strong uptrend.
No Clear Structure for Buying
From a price point of view, there is no solid reason to buy this stock at present. The structure is weak. It is like trying to catch a falling knife. Some people may still want to buy, but the chart is not supporting a fresh entry. When a stock does not show higher highs and higher lows, it is risky to expect a strong move.
The Common Averaging Mistake
Many investors have seen the old price of ₹300 and think the stock can go back there. Because of this, they keep averaging their buying price. This is a very common story in the stock market. Even some fund managers continue buying because they believe in the company’s fundamentals. Maybe they may be right in the future. But at present, the price action is not supporting their view.
Price Should Not Be Ignored
Even if you believe in fundamental investing, you should not ignore technical structure. Price gives an important message. If the chart is clearly weak, it may be better to look for another fundamentally strong stock that also has a better price structure. Ignoring price and buying just because of personal belief can damage a portfolio badly.
Wait for Clear Signs of Strength
A better approach is to wait for the structure to change. The stock should start making higher highs and higher lows. It should move above the 200 DMA and stay there. It should break important trend lines and show strength. Only then it can be considered for buying. Until such clear signs appear, it may be wise not to hurry.
