Market Coupling News Drags IEX Share Price By 27%, But Fuelled PTC India Stock Rally; Here’s Why

The recent market coupling news sent shockwaves across shares of the power trading platforms on Thursday. While Indian Energy Exchanges (IEX) shares tanked as low as 25% on Thursday, there was a bullish momentum in PTC India.

The Central Electricity Regulatory Commission (CERC) on Wednesday approved the implementation of market coupling mechanism in a bid to reshape how the power is traded in India. IEX share price tumbled around 29.49% and closed at Rs 132.45 per share on BSE on Friday.

Contrastingly, PTC India shares surged nearly more than 5% during the intraday trading. The stock ended 4.26% higher at Rs 198.25 per share on BSE on Thursday, with a market capitalisation of Rs 5,868.36 crore. PTC India is one of the key stakeholders of Hindustan Power Exchange.

What is Market Coupling?

Market coupling is a mechanism which ensures neutralisaton in divers power trading costs and structure. The centralised price discovery mechanism ensures to create a single, uniform price for electricity across different trading platforms.

The Central Electricity Regulatory Commission (CERC) in its order stated that it had decided to implement a 'Shadow Pilot' on 'Power System' and Cost Optimisation through "Market Coupling".

It is widely used in energy markets. Under the new system, power exchanges will take turns acting as the market coupling operator. Grid-India will serve as a backup and audit operator.

"The Commission, inter-alia, directed the Grid Controller of India (GridIndia) to implement the following on a shadow pilot basis: (a) coupling of the RTM of the three power exchanges; (b) separately coupling of the RTM at the three power exchanges along with SCED; and (c) coupling of DAM of the three power exchanges. Market Coupling has been scheduled to be implemented in 2026 in a phase wise manner.

Why Market Coupling News Has Negatively Impacted IEX Shares?

As of now, IEX is one of the dominant players in the energy trading industry in India. Because of its monopoly, the company enjoys higher trading costs from exchange participants. Regularisation of trading prices are likely to impact IEX costs and revenue.

Why Market Coupling News Fuelled PTC India Stock Rally?

PTC India holds stake in Hindustan Power Exchange, which is one of the market competitors in the segment. The decision to implement market coupling norms would provide equal opportunity to all the market players, PTC India CMD Manoj Kumar Jhawar told CNBC TV-18.

Hailing the decision, Jhawar mentioned that the norms would help HPX to become more competitive and provide good service. "Currently, all volumes were concentrated in IEX and this announcement will be good for the market," CNBC TV18 quoted Jhawar.