Shares of Indian Railway Catering and Tourism Corporation (IRCTC) tumbled sharply on Wednesday on the stock market. IRCTC shares fell over 15 per cent during early trade and have remained weak.

At 11:40 am, shares of IRCTC were trading 15 per cent lower on the Bombay Stock Exchange (BSE) at Rs 4,630 apiece. On the National Stock Exchange (NSE), IRCTC was trading 15 per cent lower at Rs 4,628.80 per share.

It may be noted that the stock witnessed a steep decline of 15 per cent just before yesterday’s market session came to an end. This came as a surprise to many retail investors as the stock had hit a record high of Rs 6,393 during early trade on Tuesday and the company’s market capitalisation crossed Rs 1 lakh crore. The stock had been performing spectacularly well over the past month.

WHAT’S BEHIND IRCTC SUDDEN SLUMP?

The reason behind the sudden slump that started yesterday was a sharp turnaround in sentiment, triggered by a ban on IRCTC stock from the NSE futures and options (F&O) list.

The stock has been banned under the F&O segment as it has crossed the 95 per cent threshold of the market-wide position limit (MWPL).

It may be noted that the NSE is required to put a temporary F&O ban on any stock where the MWPL crosses 95 per cent. The ban remains applicable till the positions on the contract come below 80 per cent.

Experts also indicated that many investors are now booking profits as the shares of IRCTC have jumped sharply over the past month. Having said that, IRCTC stock may not see a massive slump, according to analysts.

Avinash Gorakshkar, Head of Research at Profitmart Securities, told livemint.com that IRCTC shares will not fall much as the majority stake is owned by the Government of India.

Gorakshkar, however, warned investors to not buy the dip instantly as the market is expected to remain weak for the next few trading sessions. He also expects the stock to remain rangebound till its second quarter results are announced.

Most experts indicate that it is not a good time to buy the stock and wait for it to dip further, given the sharp turnaround.