Adani Enterprises ‘Recovers 38%’ Off Lows; Makes ‘Hammer’ Pattern!
Adani Enterprises (NS: ADEL ) has become the talk of the town. It was the most-searched stock on Investing.com yesterday, out of the entire universe of listed stocks in India. The relentless selling in this flagship company of the Adani Group, along with all other group companies has created widespread panic among investors.
Even after quite a few days amid Hindenburg Reseach’s report (the primary trigger of the ongoing selloff) came out, all entities of the group are hitting lower circuits. The share price of Adani Enterprises fell to a 35% lower circuit in the early session today. However, after a sharp sell-off, some signs of buying are being witnessed in the second half of the session.
After breaking the support of INR 2,000, the stock came crashing down all the way to a low of INR 1,017.45, marked in today’s session, from where it jumped to an intraday high of INR 1,408.65, by 1:20 PM IST, depicting a recovery of around 38% from the low.
Image Description: Daily chart of Adani Enterprises with volume bars at the bottom
Image Source: Investing.com
Yesterday, after the stock breached INR 1,600, I was expecting some reversal on account of a highly oversold reading of around 13 by the RSI. However, that scenario didn’t play out and the stock made a new low today, denoting a very strong trend in continuation. As the daily and weekly charts are clearly showing that the trend is strongly negative, going for a short position might appear lucrative, however, you need to watch out for the unprecedented volatility in the stock which could trigger the stop loss level in the blink of an eye.
A fall of 35% followed by an intraday recovery of 38% from the low is depicting the extreme volatility in the stock. There are no resistance levels till INR 2,000 which makes it even more difficult to identify a logical yet practical level to go short.
On the contrary, as of writing, the stock is making a hammer pattern on the daily chart, which is an early indication of abating supply. A hammer candlestick pattern is a reversal pattern that is known to reverse a prior downtrend to an uptrend. If the stock closes somewhere INR 1,380, then this pattern might give an opportunity to go long.
As the volatility is high, both long and short opportunities can be exploited in the stock, but with very strict risk management. One big wrong trade is enough to blow up a trading account. Inexperienced traders should steer clear from this kind of volatility.
Disclosure - I have a position on Adani Enterprises
-
I have taken 2 short and 3 long positions in adani when it was 1300. right now, I have 1L loss. option is trading at very high beta . Positions are 2 calls short of 1400 and 2 put short of 1500 and 1 put short of 1550 of next month. any anything you can suggest on this trade.Like 0
-
can you suggest sl if adani move up or goes down.. so I can get out of this messLike
-
it's too wrong to trade when stocks have high volatility....even u choose Option sell...If u choose a buy call & put straddle which will provide some profit...Like 1
-
Right said . Thanks for your suggestion. I do appreciate your views.Like
-
-
Made high after reversal 1679 and closed at 1586. Considered present situation it os fantastic recovery from low. But question is will uptrend continue ?Like
-
I invested... today at tha rate 1055 and earned...₹ 50000 exit from 1655Like 5
-
Mr.Ayush you've a long position on Adani Ent...Like
-
It's a bit complicated, have multiple positions through options. I don't hold equity shares.Like
-
-
I have sold ADANIENT2900 CE :)Like
-
adani me koi investment nahi kare abhiLike 1
-
sell bank nifty 41570 target 41400 intraday onlyLike
-
profit book in adani ent mornig buy karvaya tha so selll karke intraday profit book kare other hold your risk my target is 500 rs me more buy kare geLike
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or