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Why Zee Shares are Up 30% and what should investors do?

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Zee Entertainment Shares

Why Zee Shares are Up 30%?

Shares of Zee Entertainment Enterprises Ltd. (NS:ZEE) have surged 30% as of this report and are trading at Rs 242.9 after its largest shareholders called for an extraordinary general meeting to remove top management of the company.

The executives whom the EGM seeks to remove are Managing Director and CEO Puneet Goenka, and Manish Chokhani, and Ashok Kurien who are Directors in the company.

This EGM was initiated by the company’s largest shareholders, Invesco Developing Markets Fund and OFI Global China Fund LLC, which together hold 17.88% of the total paid-up share capital of the company. The company said in a regulatory filing on September 13 that the two funds had sent a letter asking for the EGM on September 11.

Zee Entertainment share
Zee Entertainment share

The shareholders said, “We understand that the Company is required to seek approval from the Ministry of Information and Broadcasting (“MIB”) in connection with the appointment of the Proposed Independent Directors. Accordingly, we request that the Company submit an application with the MIS seeking approval for the appointment of the Proposed Independent Directors at the earliest.”

Prior to today, Zee stock had lost 16.3%. It closed at Rs 223.5 on December 31 and closed at Rs 186.85 on September 13.

What should investors do?

Experts say the stock can rise to Rs 300-350. They advised aggressive investors to bet on the stock now but others should wait for a sizeable correction to pick the stock.

“Zee Ltd has already rallied today but I believe we may see a big upside from here if there will be any change in management, therefore, aggressive investors can bet on this stock but I would suggest avoiding other group companies as there are concerns of poor performance,” Swastika Investmart’s Meena said.

Technically, “it is witnessing a breakout of falling channel formation and manages to move above its all-important moving averages where Rs 235/260 are important hurdles; above this, we can expect a move towards Rs 300/350 levels. On the downside, 200-DMA of Rs 205 will be an important support level,” he added.

Zee formed a head and shoulder pattern on daily charts but failed to give a breakdown below its neckline, Likhita Chepa said.

“Technically it is indicating a pullback in the near term. However, investors wanting to buy the stock should wait for significant correction before investing,” she said.

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After touching an all-time high of Rs 619 in February 2018, Zee shares corrected over the next two years to Rs 114 in March 2020.

“In this rally, we have seen the Lower Top and Lower Bottom pattern. From lows we have seen stocks trying to pull back but could not give much of that as compared to other stocks and indexes,” said Viral Chheda, Analyst at SSJ Finance & Securities.

The stock, which made a high of Rs 261 in February 2021, had corrected again and was moving in Rs 165-235 range. “We can say it is consolidating here as we can see more volume generating as compared to the previous rally. It has some resistance around Rs 261 and above that, it can move further upside till Rs 300-350 odd level in the next 10-12 months. Support is around Rs 165 and below that, it can slide till Rs 114.”

Disclaimer:The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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