Adani shares have fallen significantly in the past month and what a decline it has been! Almost all the company shares have fallen by more than 50 percent. While Adani Enterprises dropped from 4,000 to 1,200, Adani Power slipped from 273 to 139, Adani Green Energy went from 1900 to 462, and then Adani Transmission had a fall from 2784 to 642. Although this has been a disaster for both, the Indian stock market and retail investors; there is a bigger catastrophe waiting to happen. Well, the Adani shares rebound can be more damaging, and here we tell you why –
The Great Recovery of Adani Shares Is Not Really a Good Sign
We all know that the stock market never moves in a straight line; it moves in waves. This is why, even if a share falls significantly, it may recover slightly and this is exactly where retail investors usually get caught up.
If you look at Adani Enterprises, the stock dropped continuously from January 24 (₹ 3,200) and reached ₹ 1,100 on February 3. But then, it started to rise again and reached ₹ 2,164 on February 8. It has been fluctuating since then, and on February 27, the share closed near 1,189. Surprisingly, Adani shares on March 3 i.e. today closed at ₹1,874 – The share has bloated more than 40% from Feb 28. While this might look like a piece of good news but it isn’t really.
Why? Well, because just like a ball, even stock prices bounce several times before it flattens out and what is worth noticing is the fact that it never goes back to its first bounce, especially in those situations where the company is not fundamentally strong but surrounded by a lot of controversies. The U-turn in this recovery and rebound in Adani shares is therefore a major cause of concern for retail investors, especially those who cannot keep their emotions aside.
Besides, all Adani shares are now on everyone’s radar. Institutional investors and mutual funds have already distanced themselves. Even LIC and SBI are likely to maintain a distance after the controversy. So who will be affected? Only retail investors. This distancing leaves retail investors as the primary target of potential traps.
Also Read: Why Adani Shares Were Rising in 2022?
Adani Shares Rebound: The Risk Involved
We have seen that Adani shares have recovered now. Such a recovery often lures traders and investors to enter the market and invest in such shares while simultaneously ignoring fundamentals. But this entry can engulf traders in an uncertain future. Even experts are unable to draw a proper conclusion and have advised maintaining a distance from Adani Group shares considering the risks involved. The Hindenburg report, SEBI-based investigations, rating agencies, and other institutions are all very well going to influence the future growth prospects of Adani shares. The current situation for the Adani group is that anything can happen.
Some Adani shares have not yet shown any recovery stage, such as Adani Total Gas, Transmission, and Adani Green. It is essential not to buy these shares emotionally as investors could get stuck badly, just like Yes Bank. Yes Bank stock serves as an example of the potential trap that Adani shares could present to retail investors.
At one point, Yes Bank was at 400, then dropped to below 200, recovered to above 200, and everyone thought it was okay and bought it. But as soon as they bought it, it fell even lower than the previous low. It recovered slightly at one stage, but this time, the recovery was around 140. And now, Yes Bank is only worth 16 rupees. Investors should learn from this example and conduct due diligence before investing in any stock, including Adani Group’s shares.
So What Should Retail Investors Do Now?
Due to Adani’s situation, Adani’s shares have become quite dangerous for retail investors. Adani shares are no longer in a safe zone. Therefore, it is better for retail investors to keep their distance from them. Besides, there are many shares in the market where retail investors can invest. Adani shares can be sidelined if you want to stay out of trouble and do not want to burn your fingers by putting your money in Adani.
As a retail investor, it’s important to keep in mind that stock market investing comes with risks, and it’s crucial to make informed decisions based on thorough research and analysis. In the case of Adani Group stocks, investors should closely monitor any developments related to the ongoing investigations and legal proceedings, as well as keep track of any significant changes in the company’s financial and operational performance.
Additionally, diversification is key to managing risk and achieving long-term financial goals. It’s recommended that investors build a well-diversified portfolio with exposure to various asset classes and sectors, rather than relying solely on a single stock or company. This helps to minimize the impact of any potential losses and can provide a more stable return over time.
It’s also worth noting that investing in stocks requires a long-term perspective, and it’s important to avoid making hasty decisions based on short-term market movements or news events. Retail investors should develop a disciplined investment strategy and stick to it, even in the face of market volatility or uncertainty. Finally, it’s always a good idea to seek professional advice from a financial advisor or investment expert before making any significant investment decisions.
