IEX shares extend slide to 35% from peak amid market coupling overhang: Buy or avoid?

Indian Energy Exchange (IEX) shares fell 9% over the past two sessions, reversing a brief rally in which the stock jumped 14% after the electricity regulator’s counsel sought time from the Appellate Tribunal for Electricity (APTEL) to obtain instructions from the Central Electricity Regulatory Commission (CERC) on withdrawing the market coupling order.

The shares fell over 7% on Friday after APTEL deferred the hearing on market coupling norms to January 19. The IEX stock has plunged 35% from its peak and is currently trading below its 50-day and 200-day simple moving averages (SMAs) of Rs 140.8 and Rs 162.5, respectively, according to Trendlyne data.

Market expert Nilesh Jain recommended strictly avoiding any fresh positions in the stock. He calls the technical chart structure of IEX weak, with support lying at Rs 132 and resistance at Rs 150.

Technical expert Anuj Gupta echoes a similar sentiment, recommending investors to avoid the stock for now citing continued weakness in the power stock. Gupta sees a strong support at Rs 130 while resistance at Rs 160.

Sandip Sabharwal, a fundamental analyst, said that a favourable verdict could be a be a significant positive for the stock. He also finds the stock inexpensive at current levels compared to other peer exchanges.

"So, if they get a favourable outcome, then obviously the stock has upside because even when the energy prices came down and there was some uptake, etc, consumption increase, the volumes held up and they have seen growth also. So, in that context the stock is not expensive, especially if you look at the way many of the other exchanges have done," Sabharwal told ET Now.

Bernstein Research has also sounded a cautious stance on the power trading platform amid the ongoing market-coupling debate. The brokerage noted IEX faces heightened policy uncertainty even as recent court developments have lifted investor sentiment.

Bernstein reiterated an 'Underperform' rating on IEX, saying regulatory risks, rather than operating performance, will be the decisive factor for the stock.

CERC's July 23, 2025 order had introduced a market coupling mechanism - a structural reform that could potentially alter how electricity prices are discovered across power exchanges. The market sees this move as diluting the company’s dominance in price discovery, liquidity, and trading volumes.

Following the announcement, the stock has continued to decline.

During last week's proceedings, the APTEL bench stated it wants to ensure CERC functioned fairly and acted independently in its decision-making.

The bench also noted that it would be incorrect to assume that the 2025 ruling, norms, or orders will automatically continue, indicating that the previous directive may not be upheld.

Ahead of the hearing, the CERC issued a fresh clarification on its July 2025 market coupling order. It said the order should be read as “directions,” - a move that appears to have heightened investor caution.

The hearing was earlier postponed after the CERC told the tribunal it was willing to take directions regarding the withdrawal of its contentious July 23, 2025, order that had sparked strong reactions in the market.

Currently, IEX holds a commanding 85% market share in the spot power market. However, market coupling threatens to redistribute volumes more evenly across exchanges, which could challenge IEX’s market leadership.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)