Adani Enterprises stock rallies 9% after 2 troublesome sessions

NEW DELHI: Following clarifications by the Adani Group on allegations made by Hindenburg, shares of the conglomerate's flagship company Adani Enterprises on Monday rallied up to 9%. Billionaire Gautam Adani-led group has also made it clear that the Rs 20,000 crore FPO will go as per schedule without any tweak in the price band or dates.

Adani Enterprises had a gap-up opening and rallied over 9% to the day's high of Rs 3,020.45.

Other Adani Group stocks such as Adani Ports, ACC and Ambuja Cements also sprang back to life by rallying up to 10%.

Adani Power, Adani Green, Adani Total Gas and Adani Transmission, on the other hand, were bleeding with double-digit cuts. Adani Wilmar was also locked in the 5% lower circuit.

In the last two trading sessions on Wednesday and Friday, Adani stocks had lost Rs 4.2 lakh crore of market capitalization.

In a 413-page rebuttal, Adani Group last night alleged that Hindenburg is an "unethical short seller" which made a windfall gain by doing a calculated securities fraud. "The allegations and insinuations, which were presented as fact, spread like fire, wiping off a large amount of investor wealth and netting a profit for Hindenburg. The net result is that public investors lose and Hindenburg makes a windfall gain," Adani said.

Adani Group said that the timing of the report was suspect and seems to be directed at sabotaging the Rs 20,000 crore follow-on public offer (FPO) by Adani Enterprises Ltd (AEL) that ends January 31.

Adani Group CFO Jugeshinder Singh said the company's long-term, strategic, inter-generational and institutional investors have not been selling the stocks. "Long-term strategic investors do not concern themselves with short-term market volatility and therefore, there is no change in their outlook. Price is not relevant to large, strategic, inter-generational investors," Singh told ET in an earlier interview.

In the damaging report, Hindenburg alleged stock manipulation and accounting frauds at Adani Group. "Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations," the report said. As a disclaimer, the firm, led by Nate Anderson, said it has taken short positions in Adani Group companies.

Technical Outlook
Technical analysts, however, warn traders to avoid making big bets on Adani stocks at this stage.

Adani Enterprises stock ended Friday's trading session below its 200-day SMA moving average. "On the downside, Rs 2400 is the important psychological support level, while on the upside; Rs 2900 is the resistance level," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.

On Adani Ports, the expert said it witnessed a breakdown of a long consolidation pattern on the daily chart with strong volumes. "The counter's overall structure is distorted because it is trading below all of its important moving averages. On the downside, Rs 500 is the important psychological support level, while on the upside, Rs 640 is the resistance level, above which we can expect Rs 700 level," Gour said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)