AEL sees buying emerge after 7-day rout

The buying was evident in delivery jumping to a five-month high of 74.9 lakh shares. It came on back of huge trading volume at 3.39 crore shares that was four times that of the two-week average. The delivery was the highest since September 29, 2022 when 91.6 lakh shares changed hands.

“(It) looked like more of positional buying than just a dead cat bounce,” said Kruti Shah, quant analyst, Equirus Securities. “The low of around ₹1,017 looks to be a strong support. While the stock could continue to remain volatile, the continuation of the bounce in the near term can’t be ruled out as indicated by sharp fall in options’ implied volatility and shrinking of price erosion.”

Anticipated price swings (IV) are one of the chief determinants of an option’s pricing.

High delivery accompanied by huge trading volumes implies buying interest at lower levels. Market observers said a further 10-15% rally in AEL can’t be ruled out.

“There’s a double bottom at around the 1,017 level and this could mean some more steam left for Tuesday’s rally,” said Rohit Srivastava, founder, IndiaCharts. “More upside of around 10-15% is possible in near term.” A double bottom is formed when a stock takes support at or around a previous low. AEL hit 52- week low of ₹1,017.45 on 3 Feb, after the Hindenburg Research report alleged corporate malfeasance, which Adani Group denied. In the latest round of selling, the stock fell 33.5% from ₹1,796.60 on 16 February through ₹1,193.50 on 27 February. The stock hit a low of ₹1,103.75 on 28 February, from where it recovered and rallied to ₹1,364 at close on 28 February. Thus, analysts and researchers view 1,017 level to be strong support and the stock having made a double bottom on Tuesday.