Investing in Adani stocks boosts market confidence

The return of traction in Adani Group shares, complemented by massive buying by domestic institutional investors (DIIs) and strong overnight gains in US stock markets, hailed Sensex and Nifty on Friday. While the BSE benchmark index closed up 900 points to 59,808, the Nifty rose 1.5 percent to 17,594.

Most Adani Group stocks were locked in an upper circle. The group’s flagship Adani Enterprises rose 17 percent and cement companies ACC and Ambuja both rose 5 percent. The rally is based on investments of over ₹15,000 (US$1.87 billion) by US-based GQG partners in Adani Group companies.

On Friday, DIIs bought shares worth ₹2,089 crore in the cash segment. Buying by foreign portfolio investors (FPIs) was tepid at ₹246 crore in the cash market. FPIs had held more than 120,000 short contracts in index futures this week.

Naveen Kulkarni, Chief Investment Officer, Axis Securities said: “Markets have breathed a sigh of relief and created a kind of floor for Adani Group shares since a regular investor invested. In addition, promoters can use the money raised through the transaction to invest capital in any company in the group that needs the funds through warrants, rights or other instruments. The development will also increase retail participation, which has been affected by uncertainty,” said Kulkarni.

“The investment means Adani Group can raise capital at current prices. Such a move is positive for bank stocks, which have recently come under pressure due to their exposure to the group. Markets are now optimistic, although usual global concerns may linger,” he added.

Nagaraj Sheeti, Technical Research Analyst at HDFC Securities said, “Nifty formed a reasonable bullish candle with a minor lower shadow on the weekly chart. The formation of such a pattern after the weakness of the past few days signals an opportunity for further upside. Immediate support is placed at 17,450 levels.”