Accident of the Day: F&O Stock Cracks to '30%' Lower Circuit!
The budget rally is fading in a jiffy as we move towards the closing of Wednesday’s session, with the Nifty 50 index currently trading 0.1% down at 17,642, by 2:25 PM IST. The sharp selloff in the index seems to be primarily coming from the ripple effect of a crack in Adani Group stocks. None of the stocks is trading in the green zone, while the majority of them are locked in at their respective lower circuits.
Adani Green is down 9%, Adani Total Gas (NS: ADAG ) and Ambuja Cements (NS: ABUJ ) are down 10% each. Adani Ports and Special Economic Zone Ltd (NS: APSE ) and Adani Enterprises (NS: ADEL ) tumbled to a 15% and 30% lower circuit, respectively which are both a part of the benchmark Nifty 50 index, contributing to a total weightage of 1.32%. Although the weightage is not high, still a severe selling pressure in the group stocks is again creating a panic-like situation in the broader markets.
Image Description: Daily chart of Adani Enterprises with volume bars at the bottom
Image Source: Investing.com
Adani Enterprises is currently trading 30% lower at INR 2,081.75, losing a whopping 50.3% from the 52-week high of INR 4,190. Earlier it seemed like the plunge in the stock was abating as the stock sharply rebounded from the lows just ahead of the INR 20,000 crores FPO (follow-on public offering). However, the stock is now significantly lower than the FPO price band of INR 3,112 - INR 3,276, which is already making FPO subscribers face some heat.
The options chain data is showing the severe pain that put options sellers are going through. As with a 30% down move, a huge number of strike prices became ITM, and therefore short sellers are running for cover which can be seen via decreasing open interest (OI) in the option chain.
Now, as the trend has again resumed on the downside, the next immediate support that the stock would now aim for is around INR 2,000. Despite a 30% cut, the order book is showing an astounding number of sellers still waiting to wind up their long positions.
The catalyst for today’s resumption of sell-off is that Credit Suisse (SIX: CSGN ) Group AG has stopped accepting Adani Group companies’ bonds for collateral margin, assigning a zero lending value for these notes. Hindenburg Research report has created a serious dent on the entire group and it seems like investors are now looking to make an exit at any level from these companies after financial institutions have also started to make their move to steer clear from this group.
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If markets support still 3000 possible in dis monthLike 0
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By any chance due to think the stock values can become zero? Or say correct 50% more like 1000 in Adani enterprises or 250 in adani ports?Like 1
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Hi Abhinav, it's difficult to gauge where the fall will eventually stop.Like
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@Aayush Khanna/Investing.com calculate the stock with at 10 P/E multiple. You will get the valueLike
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ur support has been broken ...actual support is near 1800 1810 zones where selling pressure could ease offLike 1
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Why shorts sellers run for cover if 30 pcnt downside, shudnt they be happy?Like 2
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put short sellersLike 1
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To elaborate , Put option sellers would benefit only when stock price moves up making the Put option worth less for Put option Buyers . My apologies if this clarification is not requiredLike 1
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good explanation.Like
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open market could be fair somethimes.Like
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@Niraj Agrawal Most of the times :)Like
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This is a proof that belive system is still aligned with West no trust onour system. This fragility show n proof that next time it will be anyone who can be a target.Like 1
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@Tarun bhatt If you trust then now adani shares ...Like 1
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