BHEL shares down 15% in 3 sessions: What's the reason?
What's the story
Bharat Heavy Electricals Limited (BHEL) saw its share price plummet today too. On the Bombay Stock Exchange (BSE), BHEL's stocks fell by 5.97% to ₹258.30 per share. In the last three trading sessions, BHEL's shares have plunged by 15%. The fall has been accompanied by a surge in trading volumes, which have doubled the monthly average. Today alone, some two crore equity shares were traded on stock exchanges against its one-month average of one crore.
Policy impact
Stock price drop linked to potential policy change
The decline in BHEL's stock price comes amid a wider sell-off in capital goods stocks. This was triggered by media reports last week that the Finance Ministry is considering removing a five-year-old ban on Chinese companies bidding for government contracts. The news has raised concerns of intensified competition for capital goods firms, resulting in heavy selling pressure on their shares.
Market trend
Other capital goods stocks also witness decline
The potential policy change has not only affected BHEL but also other capital goods stocks. Hitachi Energy India shares fell over 5%, Titagarh Rail Systems shares dipped 3%, ABB India stock price declined by 2.2%, Inox Wind shares fell by 2%, and Siemens shares dropped by 2.6%. Suzlon Energy's shares fell by nearly 2% and Larsen & Toubro stock price slipped by almost 1.6% on the BSE today.
Market analysis
Technical analysis of BHEL's share price movement
Ruchit Jain, head of Equity Technical Research at Motilal Oswal Financial Services Ltd, observed that BHEL's stock price has corrected with high volumes, and breached its 50-day exponential moving average support. Jain predicts the next support for BHEL's share price is around ₹253 level, and resistance on pullback moves will be seen at ₹285-290 levels.
Historical performance
BHEL's share price history
In the last month, BHEL's share price has fallen by 8%. However, it has gained over 9.5% in three months. Over the past year, the defense PSU stock has surged over 28% and jumped by a whopping 33% in two years. In the last five years, BHEL's stock price has given multibagger returns of 566%.