The shares of Adani Total Gas witnessed a significant decline over the past two trading sessions, dropping around 15% from its recent highs. This has led to concerns whether the stock can now defend the key Rs 1000 level going forward.
According to reports on Business Today, the gas distribution company’s stock price slumped nearly 10% on Wednesday to hit an intraday low of Rs 1002. Both the BSE and NSE have also placed Adani Total Gas under their additional surveillance framework amid high volatility in its counters.
The stock’s sharp fall has come after it gained over 90% in the last one month. Such meteoric rise in such a short span has raised worries whether the surge was overdone. Technical indicators are also painting a cautious picture, with the stock now below its short-term simple moving averages.
Multiple brokers have turned bearish on the counter and see downside risks emerging. Resistance is seen around Rs 1100-1185 zones, while support is pegged at Rs 975. Failure to hold above the latter could trigger more profit booking pressures. Some analysts believe the stock may revisit Rs 900 levels in the near future.
The exchanges putting the firm under ASM mechanism is also a caution signal for investors. This framework is generally imposed on companies witnessing excessive speculative trading or price manipulation concerns. It remains to be seen if the recent surge was driven more by exuberance than fundamentals.
Adani Total Gas operates city gas distribution networks across various states and is a joint venture between Adani Group and Total Energies of France. The company has been on an expansion drive to set up pipelines and CNG stations across its licence areas.
However, its stellar price rise in recent times has come at a time when most Adani Group stocks surged after the US government dismissed allegations of corporate wrongdoing against Gautam Adani. Traders are suspicious if the run-up factored in more sentiment than business realities.
With valuation multiples also appearing highly stretched and technical setup weakening, the Rs 1000 mark is emerging as a key support level for Adani Total Gas stock. Its ability to hold above this point would be closely watched to see if the uptrend has more room or if downward correction has set in. The coming weeks may provide more clarity on the company’s prospects and further stock trajectory.
