IRFC share price: Railway PSU stock jumps 6% on heavy volume; should you buy?

IRFC Share Price: Shares of state-run railway company Indian Railway Finance Corporation ( IRFC) are in high demand today (Tuesday, December 23). IRFC shares opened in the green at Rs 117.80 on NSE versus the previous close of Rs 117. The railway PSU stock extended the opening gains and went on to make an intraday high of Rs 124.48, up 6.39 per cent.

At 2 PM, IRFC shares traded firmly in the green with a solid gain of 4.60 per cent at Rs 122.43 on NSE. Trading activity in IRFC witnessed a sharp uptick, with around 4.70 crore shares of the company changing hands on the NSE around the same time versus a total traded quantity of 1,68,41,326 shares in the previous session. It was also among NSE's list of most active equities today.

On the BSE, IRFC shares quoted 4.66 per cent higher at Rs 122.45 with spurt in volume by more than 6.08 times around the same time. A total of 38 lakh equities changed hands -- significantly higher than two-week average traded volume of 6.35 lakh shares.

Today is the third straight session when IRFC shares moved higher, having delivered a return of 11 per cent in the period. IRFC shares are currently trading higher than 5-day, 20-day and 50-day moving averages but lower than 100-day and 200-day moving averages.

Commenting on IRFC shares, Shrikant Chauhan of Kotak Securities said that IRFC has seen a sharp correction from all-time highs of around Rs 230 and then slipped in a prolonged phase of consolidation. He said that a good buying activity is seen in the entire railway space with Budget just a month away. The sharp correction in railway stocks from their highs has now improved their risk-to-reward ratio.

According to Shrikant, such consolidation after a steep fall often helps in forming a strong base. The analyst said that IRFC is showing a clear double-bottom pattern on the chart, which is a positive sign. Based on this setup, he said that railway PSU stock has the potential to move higher in the near term.

"IRFC can remain in an uptrend in the near term. Rs 105 to Rs 110 is a strong zone for IRFC. My view is that IRFC has potential to move up towards Rs 140 in the near term. Maintain a strict stop loss at Rs 105 to manage downside risk effectively," he said.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)