Shares of Zomato fell sharply on Tuesday, extending their losses for the sixth straight session amid heavy volumes. The stock today slumped 4.93 per cent to close at Rs 50.15 on BSE over its previous close of Rs 52.75. The stock has lost 10.45 per cent in six days.
Around 78.90 lakh shares changed hands today, which was more than 2.5 times higher than Zomato’s two-week average volume of 28.59 lakh shares. Turnover on the counter stood at Rs 40.14 crore, commanding a market capitalisation (m-cap) of Rs 42,887 crore.
Technical charts hinted that the weakness on the counter isn’t over yet, analysts said.
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Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, “Zomato is in a secular downtrend and is hovering well below all its major SMA (Simple moving averages) on the daily chart, indicating inherent weakness. Also, the stock has seen a breakdown below the previous swing low of Rs 53.20 and is heading towards Rs 47.25-48.50-odd zone, which might act as a pitstop. On the contrary, the stock has a stiff resistance placed around Rs 56, followed by Rs 59.55-59.80 levels.”
Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “Based on daily RSI (Relative strength index) and daily MACD (Moving average convergence/divergence), it looks like downside is not over yet. In addition to the above technical rationale, Zomato is trading well below its 12-,26- and 50-DEMA (Double exponential moving average) which further confirms a downside in the coming sessions.”
One can buy only around Rs 45-46 levels for an expected target of Rs 55, keeping a stop loss placed at Rs 39, Patel added.
AR Ramachandran from Tips2trades said, “Zomato stock price has given a sharp breakdown on the daily charts today. Rs 53.2 is a strong resistance. Till a daily close above this level doesn’t happen, chances of Rs 48-46.5 levels are likely to be achieved.”
The counter’s 14-day relative strength index (RSI) came at 26.96. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a negative price-to-equity (P/E) ratio of 86.82.
The stock traded lower than 5-day, 20-, 50-, 100- and 200-day moving averages. Zomato has an average target price of Rs 67, Trendlyne data showed, suggesting a potential upside of 33.60 per cent. The stock has a one-year beta of 1.66, suggesting high volatility.
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Meanwhile, Indian equity benchmarks rose sharply today, led by gains in consumer goods, energy and technology stocks. The 30-share BSE Sensex pack jumped 563 points or 0.94 per cent to settle at 60,656; while the broader NSE Nifty index moved 158 points or 0.89 per cent higher to finish at 18,053.