Hindenburg allegations: After early selloff, Adani stocks limit losses

3 min read Last Updated : Aug 12 2024 | 11:56 PM IST

Shares of Adani group companies experienced significant volatility on Monday, with intraday losses ranging from 2.5 per cent to 17.1 per cent, before the stocks regained most of the ground lost.

The turbulence followed the release of a new report by American short-seller Hindenburg Research, which alleged conflicts of interest involving the Securities and Exchange Board of India (Sebi) chairperson, potentially hindering the ongoing investigation concerning the conglomerate.

The market capitalisation of the Gautam Adani-led conglomerate, spanning sectors from ports to airports, saw a steep decline of Rs 1.2 trillion intraday but managed to recover to close the session with a reduced loss of Rs 20,000 crore, settling at Rs 17 trillion.

Adani Enterprises and Adani Ports & Special Economic Zone, the group’s two most valuable companies and components of the benchmark Nifty 50 index, closed down by 1.1 per cent and 2 per cent, respectively. Adani Ports & SEZ was the biggest laggard among Nifty constituents.

Both benchmark equity indices – Sensex and Nifty 50 – faced pressure from the latest controversy in the Adani-Hindenburg Research saga, even as the impact was limited. The Sensex dropped as much as 480 points, or 0.6 per cent, during intraday trade, before closing 57 points, or 0.07 per cent, lower at 79,649. The Nifty 50 ended the session at 24,347, down 21 points, or 0.08 per cent.

Foreign portfolio investors (FPIs) were net sellers to the tune of Rs 4,681 crore, while domestic institutional investors (DIIs) were net buyers, purchasing Rs 4,478 crore worth of equities.

On Saturday, Hindenburg Research published a report questioning the objectivity of Sebi Chairperson Madhabi Puri Buch, stating that she owned “stake” in an offshore entity allegedly used by the Adani group to siphon off funds and inflate stock prices. Sebi, Buch, and the Adani group have claimed the allegations are baseless and misleading.

Market participants attributed the sharp sell-off in early trade to fears that Sebi might pass stringent strictures against the Adani group.

In a statement on Sunday, the market regulator said only one of the 24 investigations concerning the Adani group was pending. It has also issued show-cause notices to the several Adani group firms for disclosure lapses during the March 2024 quarter.

“Hindenburg’s first report in January 2023 was an unknown devil. Now, it’s more on the expected lines. However, whenever such reports are issued, people panic and sell. The detailed rebuttal from the Sebi chairperson and also no adverse comments from the government have helped sentiment,” remarked Ambareesh Baliga, an independent equity analyst.

Gains in technology and financial heavyweights such as Infosys, HDFC Bank, and Axis Bank helped the markets recover from intraday lows. The market breadth was mixed, with 2,187 stocks declining against 1,899 advancing.

First Published: Aug 12 2024 | 8:33 PM IST

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