How smart traders made a killing in Adani stocks

MUMBAI: Amid all the confusion in the market on Wednesday, some knowledgeable traders made a killing in Adani Group stocks. When Adani Enterprises (AEL), the group’s flagship company, commenced trading on Wednesday at Rs 570, many sensed buying opportunity.

After all, the stock had closed at Rs 648 on the NSE the previous day. But to their horror, the stock moved down to Rs 400 within minutes and to Rs 300 in the next few seconds. Finally, it fell to a low of Rs 105. What was wrong? Many of them could not understand.

On May 25, Adani Enterprises had said it would transfer part of its businesses to Adani Ports, Adani Power and Adani Transmission. Wednesday was the record date for the demerger and AEL shareholders were to get shares of all three companies. On Wednesday, when AEL fell by 80% it was only adjusting to its new price. Lack of information proved to be a costly affair for several traders who bought Adani Enterprises between Rs 200 to Rs 500 while short sellers made a killing.

There were some who even played another leg of trade in the stock. Those who held 100 Adani Enterprises shares were to get 141 shares in Adani Ports and 180 shares in Adani Power. Smart players sold Adani Ports and Adani Power in the futures markets ahead of the record date and held on to Adani Enterprises. Such a trade generated 7-10% return, which was the difference between holding Adani Enterprises share and going short on the two other companies.