AEL sees buying emerging after 7-day rout

Buying in delivery had reached a five-month high of 74.9 lakh shares. This came with heavy trading volume at 3.39 crore shares, which was four times the two-week average. The delivery was the highest since September 29, 2022, when 91.6 lakh shares changed hands.

“(It) looked more like a positional buy than just a dead cat bounce,” said Kruti Shah, quant analyst at Equirus Securities. 1,017 appears to be a strong support. While the stock may remain volatile, a continuation of the bounce cannot be ruled out in the near term, as indicated by the shrinking of implied volatility and price erosion in options.

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

High delivery with heavy trading volume implies buying interest at lower levels. Market observers said that another 10-15% rally in AEL cannot be ruled out.

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