Adani Group Shares Plunge Up to 17% Amid Political Uncertainty

Shares of Adani Group companies experienced a significant drop, tumbling up to 17% during the opening trade on Tuesday, June 4. This decline followed early vote-counting trends indicating that the Bharatiya Janata Party-led National Democratic Alliance (NDA) might fall short of the exit poll projections, creating investor uncertainty.

Key Highlights:

• Overall Market Performance:
  • Adani Power: Dropped about 14% to ₹756.65, with a market capitalization of approximately ₹3.20 lakh crore. The previous session closed at ₹875.
  • Adani Green Energy: Fell 6% to ₹1,918, down from its previous close of ₹2037.65, with a market cap of ₹3.04 lakh crore.
  • Adani Wilmar: Declined by 4% to ₹353.50.
  • Adani Total Gas: Decreased by 7% to ₹1,044.95.
  • Adani Enterprises: Dropped about 10% to ₹3,280.75.
• Acquired Entities:
  • ACC, Ambuja Cements, and New Delhi Television (NDTV): These entities also saw declines of up to 9% at the market open.

Market Indices:

• The NSE Nifty 50 index fell by 2.30% to 22,729.95 as of 10 am.
• The S&P BSE Sensex decreased by 2.31% to 74,705.76.

Previous Day’s Performance:

• On Monday, the frontline indices jumped over 3%, hitting record highs. This rally was driven by exit polls projecting a two-thirds majority for the BJP-led alliance in the Lok Sabha.

Political Context:

• The early trends from the vote count showed the NDA leading in more than 272 seats, though the extent of their victory was unclear.
• Voting was conducted for 543 Lok Sabha seats over seven phases, concluding on May 31. The majority mark required is 272 seats.

Market Analysis

Analyst Opinions:

• Riyank Arora, Technical Analyst at Mehta Equities: Mentioned that despite high volatility, technical support levels were holding up, suggesting potential movements depending on whether key support and resistance levels are breached.
• Shreyansh Shah, StoxBox: Remains optimistic about the medium-term performance of banking stocks, highlighting improved asset quality in recent quarterly results.

Impact of Political Trends:

• The discrepancy between early vote counts and exit poll predictions has introduced uncertainty, leading to market volatility. Investors are wary of the potential implications of the election results on government policies and economic stability.

Investor Recommendations:

• CLSA’s Modi Stocks: Identified companies likely to benefit from government policies under PM Modi, suggesting potential investment opportunities despite the current market downturn.

Conclusion

The sharp decline in Adani Group shares underscores the market’s sensitivity to political developments and election outcomes. Investors and analysts will be closely monitoring the final results of the Lok Sabha polls and their potential impact on the economic and regulatory landscape.

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