In last few months, stock price of PC Jeweller has really gone very wrong. On 16 Jan, Stock had touched Rs 600 52 week high. But with the news flow of Vakrangee relations with PC Jeweller, stock started declining. It was mainly triggered by earlier purchase of PC Jeweller shares by Vakrangee.
In February, PC Jeweller had seen a serious crack of over 60 percent over Vakrangee new flow. But with the help of management clarification, stock was able to recover as much as on the same day. However, with rumors of stake sale, stock again started selling from around Rs 300. And now, the stock of PC jeweller is trading around just Rs 110. It is a result of trading volumes of more than 100 crore of last few days.
From last few days, many rumours in market had started gaining great attention of investors and traders. However, now management somewhere has started clarifying some things. Till now, management has clarified that Promoter has gifted some shares to others, and behind this fall, selling by Fidelity Fund in open market could be the reason. However, still there are few things which need to be clarified. Most importantly, when Board of company is already in discussions of a Buyback, then why Fund is selling in open market. Maybe, it could be due to offer price difference between Fidelity and PC Jeweller.
Behind such a massive selling pressure and sharp fall in PC Jeweller, selling by Fidelity Fund of around 2 percent stake doesn’t look as a only concer. Few unknown sources also says that CBI has taken down some investigation in PC Jeweller company. Therefore, I think more clarity is still needed in case of PC Jeweller which may come in near future.
Technically, PC Jeweller is currently trading in a very negative trend. But as the stock has already seen a drastic fall in last few days, it may possible that stock would bounceback soon. This bounce back may puch stock price around Rs 130–150. However, it is true that there is a risk even at current levels because we exactly don’t know what is happening in the company.
Therefore as a pure trading bet at current levels of Rs 110, I think one can try to buy it for a target of Rs 130. But, keep a stop loss at around Rs 99.
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