Adani Power upper circuit: Adani Power share price zooms 5% for 2nd consecutive day; what should investors do?

Adani Power upper circuit: Adani Power share price hit its 5 per cent upper circuit for the second consecutive session on Tuesday, April 2, in an otherwise weak market. Adani Power share price opened 2.4 per cent higher at ₹574.05 against its previous close of ₹560.35 and soon jumped 5 per cent to hit its upper price band of ₹588.35 on BSE.

The stock had hit its 5 per cent upper circuit in the previous session also following its announcement on Mukesh Ambani's Reliance Industries picking up a 26 per cent stake in a Madhya Pradesh power project of Gautam Adani, and signing a pact to use the plants' 500 MW of electricity for captive use.

Also Read: Adani Power upper circuit: Adani Power share price jumps 5% as Reliance picks stake in company's MP project

Adani Power share price trend

The stock hit its 52-week high of ₹589.30 on December 6 last year and its 52-week low of ₹185.10 on April 19 last year. At the current market price of ₹588.35, the stock is up nearly 218 per cent from its 52-week low.

On a monthly basis, the stock has already recorded a remarkable increase of over 10 per cent in April. 

Should this trend continue and the stock conclude the month positively, it would mark a significant reversal from the consecutive declines witnessed over the past two months. 

Adani Power share price experienced a drop of over 2 per cent in February followed by a nearly 3 per cent decrease in March.

Also Read: Adani Group to invest over ₹1.2 lakh crore across portfolio companies in FY25; 70% for renewable business

What should investors do?

Some investors believe investors can remain invested in this stock at this juncture. 

Milan Vaishnav, CMT, MSTA, Founder and Technical Analyst of Gemstone Equity Research and ChartWizard FZE pointed out that after forming a high in December last year, the stock has been in a sideways consolidation. Following three months of consolidation, the stock has attempted to stage a breakout from this sideways consolidation zone.

Vaishnav said the stock remains locked in the upper circuit; at the same time, it has tested its previous high seen in December last year. There is a high chance that the stock will confirm the breakout over the coming days.

Vaishnav believes one can remain invested in the stock at this juncture but should have a stop loss to minimise the risk.

"Investors who are already invested in this stock can continue staying invested while trailing their stop loss higher to ₹550. A fresh entry can also be made; in this case, as well, a strict stop loss of ₹550 should be maintained," said Vaishnav.

Pravesh Gour, Senior Technical Analyst at Swastika Investmart, observed that Adani Power is coming out of a long consolidation on the daily chart, while on the weekly chart, it has given a breakout of a flag formation with strong volume. The overall structure is very bullish as it trades above its all-important moving averages.

"The pattern suggests an immediate target of ₹640, while it has the potential to move further upside till ₹700. On the downside, ₹500 will act as an immediate support level. MACD (moving average convergence divergence) is supporting the current strength, whereas the momentum indicator RSI (relative strength index) is also positively poised," said Gour.

As per Avdhut Bagkar, a derivatives and technical analyst at StoxBox, the broader trend of the stock remains optimistic, as it succeeded in providing an accumulative stance near its 100-day moving average (DMA), set at ₹518. Successive moves crossing 50-DMA placed at ₹550 have further triggered positive bias, he observed.

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