Unimit Engineering Plunges 9.5% Amid Sector-Wide Turbulence: What's Fueling the Selloff?

Summary
• Unimit Engineering (UEC) slumps to $12.80, a 9.54% drop from its previous close of $14.15
• Intraday range spans $14.48 high to $12.72 low, signaling sharp volatility
• Sector peers like AECOM (ACM) retreat 1.63%, hinting at broader engineering sector pressures

Unimit Engineering’s dramatic intraday plunge has ignited market speculation, with the stock trading near its 52-week low of $3.85. The selloff coincides with a surge in safety-related litigation in the engineering sector, including a high-profile prosecution at Hinkley Point C. Technical indicators suggest overbought conditions, while options data reveals aggressive bearish positioning ahead of the December 19 expiry.

Safety Scrutiny and Project Delays Weigh on Engineering Sector
The engineering and construction sector is under pressure as regulatory scrutiny intensifies. Recent news of Hinkley Point C contractors facing prosecution for worker injuries has amplified risk aversion. Additionally, global projects like the £45M Howden relief road and the $6B Mozambique hydroelectric initiative highlight the sector’s exposure to operational delays and cost overruns. These developments have triggered a risk-off sentiment, dragging down UEC despite its standalone fundamentals.

Engineering Sector Retreats as AECOM Trails Behind
The engineering sector’s broader malaise is evident, with AECOM (ACM) down 1.63% on the day. While UEC’s 9.54% drop outpaces ACM’s decline, both stocks reflect investor concerns over project execution risks. Sector-wide, news of safety violations and infrastructure bottlenecks—such as the Mississippi container spill and Panama Canal LPG pipeline delays—underscore systemic challenges. UEC’s sharp move, however, suggests idiosyncratic pressures beyond sector-wide trends.

Bearish Options and ETFs Emerge as Strategic Plays
• 200-day average: 8.948 (well below current price)
• RSI: 70.39 (overbought territory)
• MACD: 0.224 (bullish divergence) vs. signal line -0.034
• Bollinger Bands: Price at 12.80, near lower band (10.26) and far from upper band (14.50)

Technical indicators suggest a potential reversal after the sharp decline. The RSI’s overbought reading and MACD’s bearish crossover signal caution. Key support levels at 12.01–12.10 (30D) and 5.02–5.27 (200D) are critical for near-term direction. While the 52W low at $3.85 looms as a psychological floor, the 52W high of $17.80 remains distant. AECOM’s modest decline (-1.63%) offers a sector benchmark for relative strength.

Top Options Contracts:
• UEC20251219P12.5
- Type: Put
- Strike: $12.50
- Expiry: 2025-12-19
- IV: 78.33% (high volatility)
- Leverage: 28.40% (moderate)
- Delta: -0.3987 (moderate sensitivity)
- Theta: -0.0071 (slow time decay)
- Gamma: 0.2605 (high sensitivity to price moves)
- Turnover: $10,034
- Payoff: At 5% downside (ST = $12.16), payoff = $0.34 per share
- Why: High gamma and IV position this put for amplified gains if the selloff accelerates.

• UEC20251219P12
- Type: Put
- Strike: $12.00
- Expiry: 2025-12-19
- IV: 91.95% (extreme volatility)
- Leverage: 47.33% (high)
- Delta: -0.2740 (moderate sensitivity)
- Theta: -0.0118 (modest time decay)
Payoff: At 5% downside (ST = $12.16), payoff = $0.16 per share
Why: Extreme IV and high leverage make this a speculative play for aggressive short-term bearish bets.

Trading Outlook: Aggressive bears should prioritize UEC20251219P12.5 for its balance of gamma and IV. If the $12.00 level breaks, UEC20251219P12 offers high leverage but requires rapid execution due to its 91.95% IV. Watch for a rebound above the 14.50 upper Bollinger Band as a potential reversal signal.

Backtest Unimit Engineering Stock Performance
The backtest of UEC's performance after a -10% intraday plunge from 2022 to now shows favorable results, with the ETF experiencing a maximum return of 15.27% over a 30-day period. The 3-Day win rate is 58.92%, the 10-Day win rate is 60.22%, and the 30-Day win rate is 63.44%, indicating that UEC tends to rebound relatively quickly from such significant intraday declines.

Urgent Reassessment Needed as UEC Faces Critical Support Levels
UEC’s 9.54% drop has pushed it toward key support levels at 12.01–12.10 and the 200D range of 5.02–5.27. A breakdown below 12.00 would validate a bearish thesis, with the 52W low of $3.85 as the ultimate test. Meanwhile, AECOM’s -1.63% decline suggests sector-wide fragility. Investors should monitor the December 19 expiry for options-driven volatility and watch for a potential rebound above 14.50. For now, short-term bearish positioning via high-gamma puts appears justified, but caution is warranted as overbought RSI levels may trigger a rebound.