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Delta Corp share price tanks over 27% in one day: Should investors buy, sell or hold?

Following the GST Council's imposition of a 28% standard GST on online gaming, casinos, and horse racing on Wednesday, Delta Corp's share price experienced its steepest one-day decline ever.

The share price fell from its opening BSE price of 222.15 per unit, which was 10% lower, to an intraday low of 178.20 per unit. Shares of Delta Corp are slightly above their 52-week low of 172.30 per share, which was set on July 12, 2022.

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On July 11, the Goods and Services Tax (GST) Council imposed a standard 28% GST on online gambling, horse racing, and casinos on the whole value of the wagers. This move is anticipated to have a detrimental impact on the online gambling and casino industries.

Read more about GST shock: 28% tax on online gaming and gambling

However, given its pricing strength and long-term economic prospects, analysts think that the decline in Delta Corp shares may be a good time to buy the stock.

"Delta Corp shares experienced an immediate reaction to the GST Council decision. The business, which is the only listed participant in the casino sector, has the pricing authority to pass the cost on to clients. Despite high GST rates, it is anticipated that its business will expand, according to Avinash Gorakshakar, director of research at Profitmart Securities.

According to Gorakshakar, the expense may be passed on to customers in the upcoming quarter and will not significantly affect the company's ability to conduct business.

"Over time, the company will grow more and more. The stock market's decline can be used to buy shares at these cheap prices in order to amass them over time, according to Gorakshakar.

Also Read: Nazara Tech and Delta Corp share prices fall 5% and 20%, respectively, in response to a 28% tax levy under the GST on Online Gaming.

Technically, in March, shares of Delta Corp. surpassed the critical support level of $175, which is regarded as critical due to its historical significance.

It's crucial to remember that a closure below this mark could potentially lead to further weakening and bring the stock down into the 140 mark. The 200-day moving average (DMA) at 215 represents an immediate and significant resistance on the upswing, followed by a significant obstacle at 240. According to Santosh Meena, Head of Research at Swastika Investmart Ltd., breaking through these levels would take a lot of power and would indicate a change in momentum.

However, Meena thinks there is a chance of a consolidation period between 200 and 240 if Delta Corp is able to remain above the 175 support level. This, in his opinion, indicates that there may not be much of a directional bias in the stock's trading within this range.

According to Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher Pvt. Ltd., the Delta Corp stock plunged significantly in a single day as a result of bad news, and technical analysis showed that the trend was weakening as it breached below the 200-period MA and the 50-EMA.

"The major support would be visible near the 173 zone and for the bias to improve overall it needs to recover above the significant 200 period MA level of 214 to establish some stability and conviction," Parekh stated.

At 1:30 pm, Delta Corp. shares were down 22.59% on the BSE, selling for 191.05 each.