IEX shares rise 4%, extend gains on hopes of relief in market coupling case

IEX shares rise 4%, extend gains on hopes of relief in market coupling case

• IEX shares surged after tribunal's favorable review of market coupling rules.
• Market coupling might be postponed to December 2027 due to implementation issues.
• IEX's market share could drop to 60% by FY30E if market coupling is implemented

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Indian Energy Exchange (IEX) shares jumped 4% to Rs 155.4 apiece on January 7, their highest level since July 24, 2025, as electricity tribunal's scrutiny of market coupling rules are seen as favourable for the firm.

The stock surged 11% on Tuesday after electricity tribunal APTEL's favourable comments for IEX.

Last year, the electricity regulator Central Electricity Regulatory Commission (CERC) moved to implement market coupling from January 2026, following which IEX shares slumped 30% next day.

Market coupling would create uniform electricity pricing across platforms, threatening IEX's market dominance.

"We reckon coupling is not likely before December 2027 in light of the challenges to its implementation," JM Financial said in a note.

"All in all, given the likely volatility in near term, we maintain ‘ADD’ on IEX with a target price of Rs 160 on a valuation rollover to FY30E discounted back by three years," said the brokerage.

The domestic brokerage said given IEX's technological prowess and organisational capabilities, market share may taper to 60% in FY30E from 75% in FY28E if market coupling implemented.

CNBC-TV18 reported that APTEL observed, "We were told that this (coupling order) was done only for some officers to make money. Saw a lot of theatrics in making of these (coupling) regulations."

Market coupling is an economic model used in energy markets to create a single, uniform price for electricity across different trading platforms or exchanges, diluting IEX's dominant position.

IEX counsel said, "Even without SEBI findings of insider trading, coupling order is wrong, and needs to be set aside."

The tribunal questioned how the market coupling rules were formulated. APTEL remarked that CERC should have acted independently while drafting the framework.

"The theatrics are a cause of concern; regulation could have been done quietly by CERC. Expect CERC to be independent and above suspicion like Ceaser’s wife. If there is something amiss, we'd like to enquire and take action to avoid a repeat," the tribunal further observed, reported CNBC-TV18.

What are CERC coupling norms?

In July 23, 2025, CERC issued directions for implementing Market Coupling under the provisions of the Central Electricity Regulatory Commission (Power Market) Regulations, 2021. The implementation of this mechanism was expected to negatively impact the trading volumes on IEX, following which the stock fell 30% the next day.

There are two modes of trading on power exchanges: the real-time market (RTM) and the day-ahead market (DAM). According to a CERC order, starting January 2026, Grid-India will aggregate energy prices across all power trading platforms and publish a single unified price, a process known as day-ahead market coupling. The order said this mechanism would improve the efficiency of power exchanges and strengthen market participants’ confidence in exchange operations.

At present, electricity trading takes place on the market leader IEX, Power Exchange of India, and Hindustan Power Exchange of India. IEX dominates the market with an overall share of about 85% and a near-total presence in key segments such as DAM and RTM. Currently, buyers and sellers place bids independently on each exchange, resulting in separate price discovery across the three platforms.

With market coupling, a single market-clearing price will apply across all exchanges. The exchanges will only gather bids and forward them to a designated agency responsible for determining the common price. As a result, market coupling removes the advantage of trading on the dominant exchange, as bidders would have little incentive to prefer IEX over the other platforms.