Rally In Adani's Flagship May Have More Legs, Technicals Show
(Bloomberg) -- The rally in Adani Enterprises Ltd., the flagship firm of the Adani Group under attack from US short-seller Hindenburg Research, has the potential to extend further, according to technicals.
The shares surged 12% as of 1 p.m. in Mumbai, after climbing 14% on Tuesday, ending a seven-day losing streak that was the longest since October. Chart patterns show that bulls may be eyeing 1,900 rupees — nearly 40% higher than Tuesday's close — so long as they're able to hold the stock above critical support at almost 1,400 rupees.
The recovery that began Tuesday saw the stock end the session with a so-called “bullish engulfing” pattern. Also, Tuesday's volume on the National Stock Exchange stood at nearly 34 million shares, about 2.4 times the 20-day average and the highest since Feb. 3, when 43.9 million shares traded on the day of crash lows.
The ports-to-power Adani Group has lost about $145 billion of its market capitalization since Jan. 24, when US-based Hindenburg Research published a report alleging accounting fraud and stock manipulation — accusations that Adani Group has repeatedly denied.
Group companies have recouped some losses this week after the company kicked off roadshows in Singapore and Hong Kong to shore up investor confidence in the crisis-ridden conglomerate.
“Technical factors are suggesting a strong counter trend move in Adani Enterprises,” said Anuj Dixit, vice president of equity research at Mumbai-based Sovereign Global Markets Pvt Ltd. “There is potential for further rally in the stock as the bullish engulfing pattern is supported by high volumes.”
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Disclaimer: Adani Enterprises is in the process of acquiring a 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.
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