Adani Enterprises ‘Doubles’ in ‘4 Sessions’; Now What?
Everyone on the street is talking about the Adani Group for the last couple of weeks, all thanks to the carnage in the entire group after Hindenburg’s allegations. However, as sharp as the crash was being witnessed in all Adani Group companies, some counters are now showing an equally sharp rebound from the lows.
For Instance, after cracking over a mind-boggling 75% from the all-time high of INR 4,190, shares of Adani Enterprises (NS: ADEL ) recovered to INR 2,220 in today’s session, from the low of INR 1,017.45, marked on 3 February 2023. In other words, the stock delivered a whopping 118% return in 4 sessions. Let that sink in!
Image Description: Daily chart of Adani Enterprises with volume bars at the bottom
Image Source: Investing.com
This is the kind of unprecedented volatility we are witnessing in this counter, which has trapped both bulls and bears during a relentless one-sided fall and rally, respectively. If you traded in any of the Adani Group companies and are unscathed, give yourself a pat on the back. However, there would be many who would have made hefty losses (have received a few emails as well) but this one-of-a-kind event is enough to teach you about the importance of risk management that you would not learn through books.
Now, what from here? Continuing with my previous analysis (the link can be found at the bottom) after the hammer-like pattern on 3 February 2023 from an extremely oversold zone, the expectation of a very sharp bounce from the lows is clearly materializing now. This sharp rally would have resulted in humongous profits in long positions which definitely need to be booked now.
The upside potential to INR 2,200 has now been met. However, that does not mean that the rally will definitely fizzle out here. The move could still continue on the upside, but keeping large profits at the table and not taking them home could prove to be a big mistake. A long position should only be left open if one is using a trailing exit method.
The move on the upside could now continue to INR 2,650 which should not surprise you seeing the ongoing extreme moves. For bears, short-selling opportunities will surely arrive but waiting for the momentum to fade would be the ideal move before placing short bets. New long positions are not easy to make from the risk management perspective as exit levels are now out of the sight.
One day prior to the bottom I gave a disclosure of my position on Adani Enterprises and almost all of you guessed right (especially trollers) that I had a long position. I am out now and will not trade this counter until volatility settles down.
Read More: Adani Enterprises ‘Recovers 38%’ Off Lows; Makes ‘Hammer’ Pattern!
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Sorry words jumbledLike 0
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I have cut 50pct of my longs. Yes, risk management has very been taught by the swings seen in this scripLike
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cheers and a pat on the back for Aayush!Like 1
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I hope some readers were able to recover their losses.Like 1
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Like
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@Aayush Khanna/Investing.com dear sir thanks for your analysisLike 2
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Grea8Like 1
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@kunal kashyap ThanksLike
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