Adani Enterprises FPO: Short-term trend on the stock remains negative

A sustained move over the 50-DMA of Rs 3,881 could see the counter heading towards recording a new historic peak

Adani Enterprise, the flagship company of the Adani group and owned by the India’s richest man Gautam Adani, is set to issue a follow-on public offer (FPO) on January 27, with a price band of Rs 3,112 to Rs 3,276.

With retail investors getting a discount of Rs 64 per share, the overall FPO is expected to raise Rs 20,000 crore. The retail quota is 35 per cent, Qualified Institutional Buyer (QIB) is 50 per cent, and Higher Net-Worth Individuals (HNI) is 15 per cent.

Adani Enterprise shares traded at Rs 3,450 on NSE at 10.40 AM contemplating 10 per cent discount to the FPO price. 

Since FY2017, the feat of Adani Enterprise shares has been unparalleled. Barring FY2018 and FY2019, all other instances have seen double-digit gains in the share price. Since FY2020, the stock has generated staggering 1,500 per cent returns to its investors.  

Stock came under radar since the second half of 2020-21 when the price took a vertical rally from Rs 150 to Rs 1,700, a 1000 per cent rise in 14 months. It continued to rally further, recording new all-time highs, with market participants exceptionally enjoying the blazing rally.

Thereafter, the stock witnessed some profit booking or obstacles when it surpassed Rs 4,000 levels. Initially, the stock went southward, but soon recouped losses to seize the positive stance. 

While the recent trend has not been thrilling, especially since late December last year, with the stock losing 17 per cent from its historic high of Rs 4,190-mark, the investor sentiment has remained stable. 

Technically, the counter trades beneath the 50-day moving average (DMA) and 100-DMA identified at Rs 3,881 and Rs 3,675, respectively, short-term moving averages are crucial for identifying immediate sentiment.

Although the existing trend reveals weakness, bears could take over the momentum only when the stock slips beneath Rs 3,200 and fails to show any signs of revival. In that scenario, the price action may drag stock towards Rs 3,020-Rs 3,000 levels, its 200-DMA.

On the flip side, a sustained move over the 50-DMA of Rs 3,881 would see the counter breaking out on the upside heading towards recording a new historic peak. The counter may then hit fresh leg of up move leading towards Rs 4,500 levels.  CLICK HERE FOR THE CHART