Shares of Adani group companies could continue to be under pressure this week even as broader market indices are expected to witness increased volatility ahead of the Union Budget and US Fed rate hike decision to be announced on February 1. 

“With lots of noise around Adani Group shares over the last two days, it is advisable for investors to stay away from them till clarity emerges on the various controversial remarks from the US-based Hindenburg Research,” Manish Chowdhury, Head of Research at Stoxbox, said.

Adani m-cap down

The market capitalisation of Adani Group companies fell to ₹15.01-lakh crore on Friday from ₹19.19-lakh crore on Wednesday after a report from Hindenburg Research claimed that Adani companies are facing financial risks.

Experts said the focus will be on the strategy adopted by institutional investors in the ongoing FPO by Adani Enterprises. On day one, the qualified institutional buyers’ portion received bids for only 2,656 shares against 1,28,21,336 shares.

Chowdhury said investors should adopt a wait and watch approach at least for the next week when there are two major events lined-up viz-a-vis Union Budget and the US Federal Reserve interest rate decision. Though the Budget is mostly expected to be pro-growth, the US Fed looks in a conundrum over the size of the rate hike. 

Ruchit Jain, Lead Research, said readings in the hourly time frame are in an oversold zone and the volatility index surpassed 17 which indicates that there could be some sharp moves on both the sides resulting in increased volatility ahead of the Union Budget. “Nifty has re-tested its 200 EMA (around 17,550 now) after almost 4 months and thus 17550-17500 would be seen as an immediate support zone. Below this, the Nifty could continue to slide towards 17400-17350. The short-term trend is down until changed and hence, traders should be cautious and avoid aggressive positions,” Jain said 

Mitul Shah, Head of Research at Reliance Securities, said in the run-up to the Union Budget 2023, sector and stock-specific movements are expected to hit the markets in the coming weeks.