Mowat thinks the situation is still such where the volatility around these stocks is extremely high and is very difficult for a long term investor to analyse the share price trend.
With investors still keeping an eye on Adani Group stocks, Adrian Mowat, Chief Asian and Emerging Markets Equity Strategist, JP Morgan, told Moneycontrol that he would still prefer staying on the sidelines.
“And for now, I would be very much in the camp of just staying on the sidelines and not having a strong view and certainly not committing the portfolio to these companies,” Mowat said.
He explained, “I think a lot of institutional investors have decided to sidestep Adani, and it hasn't been sitting in in people's portfolios. That was primarily because the valuations looked high”.
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Mowat thinks the situation is still such where the volatility around these stocks is extremely high and is very difficult for a long term investor to analyse the share price trend.
Prices of Adani group stocks have tumbled over 60 percent since January 24 following the Hindenburg report. Since the scathing report by the US short seller was out, alleging the conglomerate of fraud and stock manipulation among other things which the group has denied, the Adani group has tried to rebuild investor confidence and allay concerns about its debt by pre-paying loans.
However, contrary to the popular belief, some investors might find it tempting to invest in some Adani Group stocks purely looking at the charts, considering the freefall in these stocks.
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“While it may appear enticing to buy because it has fallen much, there may be a technical bounce back. However, we believe this rebound will not be sustainable and we suggest caution when investing in the Adani Group,” said Sunil Damania, Chief Investment Officer, MarketsMojo.
He believes that Adani Group stocks will stay volatile depending on the newsflow. “Based on the precedent of previous groups that have become entangled in corporate governance issues, those groups have not recovered.”
Besides, he thinks there is a good chance that Adani Group companies may underperform in the medium to long run.