The movement in the stock of PC Jeweller, reminds one of the sharp intra-day movement that bitcoins were seeing recently.
On Thursday, the shares first hit Rs 94, then when to a high of Rs 126 and finally settled at Rs 121. On Friday, the shares jumped to Rs 146 and were trading 20 per cent higher by 2.00 pm. The shares have fallen from 52-week high levels of Rs 600 to the present levels.
In the month of April, PC Jeweller disclosed that the promoter had gifted some shares to his relative. The shares have crashed from Rs 233 levels to Rs 144 in just four trading sessions. Some unconfirmed reports say that there was some huge unwinding by a leading mutual fund.
On Thursday, a business news channel reported that there were raids at the Nagpur showroom by the CBI. The company's MD has denied the same. The company in a statement released to the exchanges has said that the reports are factually incorrect. Bulk of the fall in the shares has come due to some selling by an institutional investor.
Interestingly, the company has announced a buyback of shares which should lift the share price of the company.
The Managing Director of the company has stated that the promoters would not participate in the buyback of the shares. This is inspiring and would result in higher sale to retail investors. If the six months average price is taken into consideration then the shares could be offered at Rs 360 or thereabouts. This makes the stock price of Rs 144 for PC Jeweller extremely cheap.
It should be a wait and watch game at P C Jeweller. At the moment it looks like the selling pressure has abated, given that the total amount of delivery to traded quantity is just 7 per cent on the NSE. A rally in the stock ahead of the buyback announcement on May 21, cannot be ruled out.