Momentum Pick: High-beta Adani Power shares rally 15% in 3 sessions. Should you buy?
Adani Power have risen 15% in three sessions and are poised for another 10% upside from here riding on the current momentum but any fresh move in the stock should only be made on declines for a favourable risk-to-reward ratio, experts tell ETMarkets.
Notwithstanding an 8.1% stake sale to the US-based investment firm GQG and other investors in a $1.1 billion deal last week, the stock has displayed significant momentum since hitting a 52-week low of Rs 132.40 on the NSE on February 28 as a fallout of the Hindenburg report. The stock has since then given multibagger returns of 145%.
Despite market upheavals over the past one month where the 50-stock Nifty has delivered a negative return of 1.42%, this Adani stock has rallied more than 37%.
Adani Power shares are currently trading above their 50-day and 200-day simple moving averages (SMAs) and Monday's move has taken the stock into an overbought zone.
The day's RSI and MFI stood at 78 for both indicators, as per data available on Trendlyne. A number above 70 indicates that the stock is trading in an overbought zone.
The stock still has some steam left in this leg of the rally and could see an upside of 10% from Monday's closing price if it crosses the immediate resistance of Rs 330, Anuj Gupta, Head Commodity & Currency at HDFC Securities said while fixing the next target at Rs 360.
Gupta said that the stock is forming higher tops and higher bottoms and is looking positive with a bullish chart structure. Support is seen at Rs 290 with next support at Rs 260, the HDFC Securities analyst said while recommending a buy on declines.
After a trend reversal in April 2023, the stock has has surpassed all its short and medium-term averages on a closing basis and sustaining above the
