Shares of Adani Power fell sharply in Wednesday’s trade to hit their lower price band amid heavy volumes. The stock plunged 5 per cent to hit its lower circuit level of Rs 212.75 against a previous close of Rs 223.90. Around 15.07 lakh shares changed hands today, which was more than four times compared to Adani Power’s two-week average volume of 3.61 lakh. Turnover on the counter stood at Rs 32.54 crore, commanding a market capitalisation (m-cap) of Rs 82,056.38 crore. At today’s low-price level of Rs 212.75, the scrip has lost 22.58 per cent in five sessions.
Adani Power, in an exchange filing, announced that it has mutually agreed to extend the validity of the Memorandum of Understanding (MOU) to sell its entire stake in a wholly-owned subsidiary, Support Properties (SPPL) to AdaniConnex (ACX) for Rs 1,556.5 crore.
The proposed transaction is expected to be completed by March 31, 2023, instead of the previous completion date of January 31, 2023. ACX is a 50:50 joint venture between Adani Enterprises and EdgeConnex.
“Adani Power stock price is still oversold but bearish with strong resistance at Rs 249. A daily close above Rs 249 level could trigger a bounce back till Rs 272-290 in the near term. Next support is at Rs 212,” said AR Ramachandran from Tips2trade.
The stock was last seen trading lower than 5-day, 20-, 50-, 100- and 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 18.27. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a negative price-to-equity (P/E) ratio of 528.40.
Adani Power has a one-year beta of 1.29, indicating high volatility.
Adani Group stocks started tumbling after a report by US-based short seller Hindenburg Research alleged that the Indian conglomerate had engaged in stock manipulation and accounting fraud scheme over the last few decades. Adani Group, however, refuted the claim as baseless.
The group accused Hindenburg of not doing proper research and “copy-pasting” from the company disclosures.
It said that the timing of Hindenburg’s report clearly showed the short seller’s intention to damage “the follow-on public offering from Adani Enterprises, which is the biggest FPO ever in India.”
However, the Rs 20,000 crore FPO from Adani Enterprises got sailed through and was fully subscribed after high-net-worth individuals and institutional investors bid strongly. Though, the offer received poor to tepid response from retail investors and employees.
Meanwhile, Indian equity benchmarks climbed in early deals, led by gains in financials, banks and consumer durables.
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