On August 14, 2024, Suzlon Energy Limited’s share price faced a significant decline, dropping by approximately 4.18%. The stock was trading at ₹78.86, down from a previous high of ₹84.40 reached just days prior. This downturn has sparked various reactions among investors and analysts, who are closely monitoring the situation.
In recent days, Suzlon’s stock had been on a remarkable upward trajectory, gaining around 22% over five trading sessions. The stock peaked at ₹84.40, marking a 52-week high. However, the momentum shifted today, leading to concerns among investors about potential profit booking and market volatility. Analysts noted that the stock’s price-to-earnings (P/E) ratio currently stands at 126.23, indicating that the shares might be overvalued, especially in the short term.
Investors have expressed mixed sentiments about the stock’s performance. Some see this dip as a buying opportunity, while others are cautious due to the stock’s recent volatility. Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, commented on the situation, stating that while the stock has shown impressive gains, the current valuations appear stretched. He advised investors with high-risk appetites to consider entering the stock but recommended maintaining strict trailing stop losses to mitigate potential losses.
Technical analysts have also weighed in, suggesting that a decisive close above the ₹84 level is crucial for further upward movement. Shiju Koothupalakkal, a Technical Research Analyst at Prabhudas Lilladher, indicated that the stock has strong support at ₹76, with additional support levels at ₹73 and ₹66. He emphasized that if the stock can break through the ₹84.30 resistance level, it could target higher levels of ₹94 to ₹110 in the near term.
Despite the day’s decline, Suzlon’s stock remains above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, suggesting a positive long-term trend. However, the stock’s relative strength index (RSI) was reported at 80.62, indicating that it is in the overbought territory, which may lead to further corrections in the near future.
Market sentiment has also been influenced by broader trends in the renewable energy sector. On the same day, the sector experienced a collective decline of 2.24%, which may have contributed to Suzlon’s underperformance. Investors are advised to keep a close eye on the overall market conditions and sector performance as they make decisions regarding their investments.
The Additional Surveillance Measure (ASM) framework has been applied to Suzlon’s securities by the BSE and NSE. This measure is typically implemented to alert investors about high volatility and potential risks associated with trading in certain stocks. Such measures can often lead to increased caution among investors, further impacting trading volumes and price movements.
