Stock Market: Magical 1400 times return in 1-day for lucky birds; caution revisits street

Spread love

By S Jha

New Delhi, May 23: Street appears to have forgotten the Hindenburg report saga involving the Adani Group of companies. The Adani stocks have become goldmine in a matter of a few days. The midcaps and smallcaps from the Adani stable remain locked in the upper circuits.

Adani Port and SEZ has erased all the losses since the short seller’s report hit the group. Adani Enterprises is making the meaning of galloping visible on the street on a daily basis.

The discussion between US President Joe Biden and the House Speaker Kevin McCarthy remained inconclusive over the debt ceiling, which is keeping the American bourses on the edges. There is a fear that the negotiations may be protracted, and they could affect the global equity markets. June 1 is the deadline for averting the US default on debt, and the Congress by then is expected to approve the debt ceiling arrangements. But till then the markets may remain sideways, depending on the news flows.

Option trading can make one rich and poor overnight on the basis of risks taken on the bets. Those who had faith in the Adani Enterprises and could hold on to their CE May 25 series bet live may have minted money in a span of just one day. The May 25 Adani Enterprises’ Rs 2300 option CE strike price was quoting at Rs 23 on Monday morning. On Tuesday, the price had zoomed to Rs 444, while settling for Rs 343, giving a return of 1400 multiples. This is the mad world of option trading where one may in the proverbial once in a moon day may hit the jackpot.

Adani Enterprises is witnessing a massive short covering as the weekly and monthly option expiring is scheduled for Thursday. The scrip broke out of the tight trading range on the back of the positive news flow. But one must not forget that the scrip still commands astronomical PE valuation, which is rare in any part of the world in the equity markets.

The IT index remained in focus on the back of NASDAQ in the US gaining strength. However, NASDAQ and Dow Jones were both trading with cuts during the afternoon session on Tuesday, following the inconclusive debt ceiling negotiations. With another one week to go for the June 1 deadline, the market participants are expecting choppy trades on the bourses.