Adani Stocks, Valuations, Volatility and Consolidation
Adani Stock are in limelight after Hindenburg research. Stocks have fallen heavily after the news and FPO had been withdrawn.
Lets try to understand by combining Valuation fundamentals, Technical analysis and volatility. Also try to decode what usually happens after such wild moves.
1. Adani Stocks were on continuous rise after Covid drop
2. Valuations of some of Adani group stock reached sky high. PE multiples of some of the stocks are still above 100.
3. When stock makes top with extreme valuations there is chance of sharp correction.
4. There is no definite method to identify stock top yet from confluence of price action, volume and indicators one can identify them like Candlestick reversal pattern, Divergence on weekly or daily charts on MACD or RSI and abnormal selling volume are few to look out for.
5. Stock sharp correction is linked to volatility or Fear which can give wild moves on both up and down side
6. Volatility then gets contracted and stocks goes in long consolidation
7. It may make smaller new low but still for good amount of time it won't recover and hit fresh highs
Similar example is IRCTC check image below to understand in which phase Adani stocks are
Disclaimer: This is just educational analysis, readers shouldn't conclude this as ultimate truth and need to conduct their own studies. Stock markets are dynamic in nature as human emotions are involved. Anything and everything possible.
Disclosure: Don't own IRCTC or any Adani stocks nor have any bad will against them.
Lets try to understand by combining Valuation fundamentals, Technical analysis and volatility. Also try to decode what usually happens after such wild moves.
1. Adani Stocks were on continuous rise after Covid drop
2. Valuations of some of Adani group stock reached sky high. PE multiples of some of the stocks are still above 100.
3. When stock makes top with extreme valuations there is chance of sharp correction.
4. There is no definite method to identify stock top yet from confluence of price action, volume and indicators one can identify them like Candlestick reversal pattern, Divergence on weekly or daily charts on MACD or RSI and abnormal selling volume are few to look out for.
5. Stock sharp correction is linked to volatility or Fear which can give wild moves on both up and down side
6. Volatility then gets contracted and stocks goes in long consolidation
7. It may make smaller new low but still for good amount of time it won't recover and hit fresh highs
Similar example is IRCTC check image below to understand in which phase Adani stocks are
Disclaimer: This is just educational analysis, readers shouldn't conclude this as ultimate truth and need to conduct their own studies. Stock markets are dynamic in nature as human emotions are involved. Anything and everything possible.
Disclosure: Don't own IRCTC or any Adani stocks nor have any bad will against them.
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