F&O Stock Cracks 10% from High; Hits ‘Lower Circuit’!

  • Stock Market Analysis

There is no doubt that the broader market weakness has taken a toll on many stocks, except some in the pharma space. The Nifty 50 index increased its fall to a 1.21% cut to 16,888 by 2:58 PM IST with many stocks taking a heavy beating today.

However, one stock has been showing excessive weakness just before the session's close and that is Adani Enterprises (NS: ADEL ). It recently got added to the premier Nifty 50 index with a weightage of 0.97% and since then has been plunging, but today’s selling spree in this counter is on a different level. In fact, almost all of the stocks of Adani (NS: APSE ) Group are seeing investors fleeing from these heavily overpriced stocks. In fact, Adani enterprises was the most expensive stock in the Nifty 50 index with a P/E ratio soaring above the 500-mark. To put it in perspective, the P/E ratio of the Nifty 50 index itself is 22.72! 

Image Description: Daily chart of Adani Enterprises

Image Source: Investing.com

After making a high of INR 3,885 on 20 September 2022, the stock is only seeing a downward direction. But today, the stock plunged 10% to hit a lower circuit as a panic-like situation seems to be taking over investors’ sentiments. The supply of the stock is overwhelming the demand for it and hence it seems a difficult situation for the bulls who were supporting the stock’s rally till now.

Some perma bulls might call it a mere correction of the previous rally which could be true, however, a correction strong enough to hit a lower circuit should not be deemed as a mere correction. From the high of INR 3,855 to the CMP of INR 3,115, the stock is down over 19.8% and a fall of 20% from the major peak technically quotes the stock to be in bear territory. As the stock has plunged significantly from the highs therefore a bounce back from here should not surprise traders but the primary trend seems to be finally changing in the favor of bears. The massive bearish engulfing candle at the very top was the first indication of a trend reversal which I covered on 21 September 2022.

The immediate support for the stock was around INR 3,200 and as the stock is trading below this level, the next support comes around INR 3,000. Looking at the high volatility of the stock, a move either on the upside or downside could be sharp. Therefore, a cautious stance in either direction should be maintained.

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  • Girish Kandhari @Girish Kandhari
    No view!!!!!
    Like 0
  • kadar supermarket @kadar supermarket
    now what are you trying to say... is it falling? yet you expect a bounce back.... what a wonderful advice.. it's like it's cold yet it's hot ....buhahahaha
    Like 2
    • Avinash Kulkarni @Avinash Kulkarni
      Why you rely on anyone's say?
      Like 0
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