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The stock of avic Chengdu aircraft of China, the maker of J-10 fighter jets currently used by Pakistan, has been hit by sharp selloff, after Indian Prime Minister Narendra Modi issued strong message against terrorism, and unleashed ‘Operation Sindoor’ over, Kashmir killing wave that terrorized the southern parts of the India. The defence had hit nearly 12% on three trading sessions due to India-Pakistan tension. The analysts mention the investor fear of India’s hard line and geopolitical risks. At the same time, technical charts indicate that there is not much upside at least in the short term, but to be cautious.
Avic Chengdu Shares Fall as Modi Warns Pakistan
Stock prices of Avic Chengdu Aircraft, one of China’s AVIC defence conglomerate, plummets after strong Indian response to cross border terror. The stock opened 3% lower at 87.74 yuan and hit a session low of 84.65 yuan, losing 6.3% intraday on May 15. This decline emanated after India conducted Operation Sindoor a rapid airstrike operation against India as a counter reply to terror attack which occurred on 22nd April 2004 at pahalgam where civilians were killed26. Prime Minister Modi said “terror and talks cannot go together”, and India’s policy of intolerance towards terrorists was reiterated.
India’s defence ministry has announced that Indian Air Force was capable of jamming and evading Chinese-made air defence in Pakistan. This exhibition of technological dominance heightened concerns amongst the investors that had stocks in chinese defence firms that sold weapons to Pakistan.
Technical Analysts Advise Caution
In spite of a 43% rally in earlier May from the back of Pakistans aggressive use of J-10 jets, Avic Chengdu aircraft has been making losses in the past four months. Experts warn analysts that the stock is trading at an overbought zone. Ganesh Dongre, Anand Rathi spot bearish double-top pattern and stiff resistance at 90–95 yuan. The further correction to the levels of 60–65 yuan is possible if the price slips below 76 yuan.
The volatility on the grounds of heightened geopolitical risks and misinformation surrounding the India-Pakistan conflict, Dr. Ravi Singh of Religare Broking says. Both of the analysts recommend not to use fresh entries, but wait for a more powerful support level for a long-term position.
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