Adani Ent. Rallies 15%: ‘Revival’ in Group Stocks?
After the Hindenburg Research’s report, shares of Adani Group companies were torpedoed to 52-week lows. In fact, some of the group stocks have lost a whopping 80% value from their all-time highs as investors kept on exiting at every possible level. The only thing that kept these stocks from going to 2 digits was the circuit limits of the NSE.
After an unprecedented wave of supply of shares of these companies, it finally seems like some accumulation has started at these beaten-down levels. For instance, the group’s flagship company Adani Enterprises (NS:) rallied 14.27% to INR 1,363.85 in today’s session, after 7 consecutive days of losses. Another F&O counter – Adanji Ports and Special Economic Zone jumped 5.42% to INR 592.45, closing its 4th straight green day.
Other group stocks such as Adani Green Energy (NS:) closed at the upper circuit for the first time after the fiasco, with a volume of 8.5 million shares and three other stocks also closed at the 5% UC. Adani Transmission (NS:) which still closed at a lower circuit clocked a heavy volume of 4.59 million shares, the highest since 30 January 2023. In fact, 8 out of 10 stocks closed in the green which is clearly denoting investors’ interest in the group now.
Despite some early indications of abating supply, trying to buy these stocks is akin to trying to catch a falling knife which is extremely risky. However, those willing to take extremely high risks and capable of going in and out of their position quite swiftly can look for some long opportunities at these levels.
For instance, Adani Enterprises can easily surge to its hurdle of INR 1,600 and that too in this week only if the momentum continues. However, the stop loss levels cannot be placed close to the CMP, owing to the stock’s high volatility. A level of INR 1,100 might be an ideal one for long positions but that distant level also means traders have to reduce their position size noticeably to minimize their potential risks.
A gigantic volume in Adani Transmission is making it a good candidate to be on the watchlist of bulls. Once, the stock breaks the high of the previous lower circuit, it can also provide a good long trade. One thing to be extremely cautious of in such stocks is no matter what, traders must not get stuck in lower circuits.
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