Ola Electric jumps 4% as company clarifies on stake sale by promoter; should you buy, sell or hold?

Ola Electric Share Price: Bhavish Aggarwal-led Ola Electric Mobility shares today (December 22) extended the gains to the third straight session as the company issued a clarification on the recent stake sale by the promoter. Ola Electric shares opened on a flat note at Rs 36.64 on NSE and went on to make a high of Rs 36.10, up more than 4 per cent.

Around 11:20 AM, Ola Electric shares traded 1.20 per cent higher at Rs 35.05 with 4.35 crore equities changing hands. Ola Electric shares are gaining the last three consecutive trading sessions, having delivered a return of more than 15 per cent. At present, the counter is trading higher than 5-day moving averages but lower than all the other key moving averages.

Today's buying was buoyed after Ola Electric issued a clarification that the recent promoter stake sale was undertaken to repay debt and fully release all pledged promoter shares. On December 19, the company completed a three-day stake sale worth Rs 324 crore. Post this, the promoter group holds 34.6 per cent stake in the Bengaluru headquartered company.

In a separate filing on December 22, the company confirmed that the proceeds from the sale have been utilized for repayment of debt.

"Further to the completion of the one time, limited monetisation of a small portion of the promoter’s personal shareholding, the Company confirms that the proceeds from the sale have been utilized for repayment of debt, interest and charges thereon and the remainder will be used for payment of applicable taxes pertaining to the aforesaid transactions in due course," Ola Electric said in filing.

Following the repayment of the debt, it said, "all promoter-level share pledges aggregating to approximately 3.93 per cent of the Company’s total equity have been fully released. The promoter group continues to hold 34.6 per cent in Ola Electric."

Commenting on Ola Electric stock, Harish Jujarey, AVP and Head – Technical Equity Research at Prithvi Finmart, said that the sentiment is very weak for Ola Electric Mobility. Ola Electric is also trading below major moving averages.

"On the chart, the lower top, lower bottom pattern is intact which shows the continuation of weakness. The conviction is very weak though we are seeing a rise in volume. As long as Ola trades below Rs 40, the trend will remain weak. My view is that investors are exiting from this stock whenever there is a bounce. If someone has a long position, I would suggest it is better to exit whenever the counter moves towards the levels of Rs 39-40. Overall, I think we should follow the sell on rise strategy in Ola," 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.)