Ambuja Cements sees sharpest intraday fall since 2006 on margin funding pressure

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The share price of Ambuja Cements fell over 25 percent intraday on January 27, recording its steepest fall since May 2006. After hitting the day's low of Rs 345.15 on the National Stock Exchange (NSE), it recovered to close at the Rs 380 mark.

Trading volumes were also heavy at 91 million shares on NSE. This is over 18 times the 20-day average of 5 million shares.

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Dealers said that the stock has been in a free fall due to margin-funding pressures. The stock saw a rally following the announcement of the open offer at a price of Rs 385 per share soon after Adani Group's stake acquisition from Holcim. The stock touched a high of Rs 574. It declined after the open offer only to climb again and stabilise at higher levels.

With the sentiment on Adani Group stocks turning negative, there was pressure on the Ambuja stock, too, with nervousness around unwinding of margin positions gripping the market, dealers said.

Also Read: Adani Group pledges stake worth $13 billion in Ambuja Cements and ACC

In September 2022, the group pledged entire stakes in Ambuja Cements (63.2 percent) and in ACC (56.7 percent), worth about Rs 96,800 crore, with Deutsche Bank’s Hong Kong branch, stock exchange disclosures showed.

However, data as of December end shows zero promoter pledge.

"Ambuja Cements is extremely oversold on the daily charts. Investors can buy after a green candle on the daily charts with a close above Rs 458 resistance level. Targets can be Rs 491-530 in the coming weeks," A R Ramachandran, co-owner, Tips2trades said.

Milan Vaishnav of Gemstone Equity Research said investors should have a stop loss of Rs 340.

Adani stocks have been under pressure after a Hindenburg Research report that has been termed “bogus" and "malicious" by the group. "The timing of the report’s publication clearly betrays a brazen, mala fide intention to undermine the Adani Group’s reputation with the principal objective of damaging the upcoming follow-on Public Offering from Adani Enterprises," group's CFO Jugeshinder Singh has said.

Also Read: Adani Group responds to Hindenburg report, calls it 'malicious'

Shares of Adani Ports and Adani Enterprises fell 17 percent each on January 27, while Adani Wilmar and Adani Power were locked in 5 percent lower circuit.