Why were Adani stocks soaring in trade today - explained

Stock market today: Adani Group stocks ended in green on Monday's trading session, with Adani Enterprises and Adani Ports & Special Economic Zone being the top two gainers of Nifty 50 index. Adani Group shares surged, contributing to its gains from the previous session after the supreme court (SC) appointed panel looking into allegations made by Hindenburg Research found no evidence of a 'regulatory failure' by market regulator Securities and Exchange Board of India (SEBI).

The market value of the ten Adani stocks rose to around ₹10 lakh crore on Monday, marking the highest increase since the release of Hindenburg's scathing report in January. 

Adani Enterprises share price started to trade with a gap up opening and the positive momentum continues as the day progressed. The stock almost hit an upper circuit of 20% ( ₹2,348.25) by recording an high of ₹2,344.50 and settled with gains of 18.84% at ₹2,325.55 apiece on BSE. 

Meanwhile, Adani Ports & Special Economic Zone shares post a gap up, witnessed positive traction as the counter went on to almost hit a 10% circuit ( ₹756.95) as it made a high of ₹753.10. The stock eventually settled with gains of 6.03% at ₹729.65 apiece on BSE.

Adani Ports on Friday closed at ₹688.15, up 3.65%

Adani Green, Adani Wilmar, 2 other hit upper circuit

The following stocks reached their upper limits and closed at their intraday highs: Adani Total Gas, Adani Green Energy, Adani Transmission, and Adani Wilmar.

Adani Total Gas shares started with a gap up of more than 4% and then the stock hit its day upper limit of 5% upper circuit and closed at the circuit levels of ₹721.35.

Adani Transmission share prices started the trading activity around the upper limit of the 5% circuit and eventually closed at the circuit level of ₹825.35.

Adani Green Energy shares started with a gap up of more than 4% and then the stock hit its day upper limit of 5% upper circuit and closed athe the circuit levels of ₹942.40.

Adani Wilmar share prices started with gains of more than 2% and went on to climb higher to eventually hit an upper circuit of 10% and end the day at the same at ₹444.40.

According to the 173-page report, the committee found "no evident pattern of manipulation" in the sharp stock price rise in billionaire Gautam Adani's companies that can be attributed to "any single entity or group of connected entities."

Nevertheless, investigations are still being conducted. The Supreme Court has given SEBI until August 14 to wrap up its investigation into potential securities law violations by the Adani Group as well as any odd market activity in its stocks.

According to Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities Adani group stocks are in green zone after SC-appointed panel of experts examining India's regulatory mechanism in an investigation linked to the Hindenburg allegations has given a clean chit to the Adani Group. If we go with fundamentals post Hindenburg saga there has been no material impact on company businesses and such clean chit reports would gradually increase confidence in the group stocks.

“We continue to remain neutral on this development despite stock prices moving high ahead of the news impact. We believe going forward we will get more updates for other regulatory bodies on this group which could keep this counter in volatile action,” said Tapse.

Further, media reports claim that the Adani Group is looking into the potential of selling off real estate holdings that have been considered to be non-core to its business. The group has already discovered a few of these resources and is currently compiling a list of further ones.

Technical Views

Kapil Shah, Technical Analyst, Emkay Global and Technical Trainer, Finlearn Academy, said that Nifty has recovered from the support level and breached immediate resistance which is a bullish continuation sign. Adani stocks have also moved out from the hibernation period.

According to Shah, Adani Enterprises had been in the range of 1,800 to 2,000 level for 26 trading sessions. The stock has breached the upper band, which is a bullish development. The stock has moved above the short-term moving average but sailing below the long-term moving average. Stock is at a resistance of 2,225 level but no reversal sign observed yet. Moving above the 2,225 level can be considered as further bullish validation and it can pave the path up to the 2,430 level.

‘Not proven’ at this stage: SC panel on Adani-Hindenburg

On the other hand, Adani Ports & Special Economic Zone breached major resistance of the 725 level, which is a positive development. Stock is above the long to short-term moving average that indicates relatively better relative strength as compared to other Adani group stocks. The stock has immediate support at 710 and resistance at 780 level. The underlying tone is positive, according to Kapil.

Further, Adani Total Gas has shown very initial signs of support from 4 months low. On the daily chart, stock has formed a positive candle but the structure still remains weak as the stock is under a lower high and lower low sequence and trading below the short to long-term moving average.