On Wednesday, India’s stock markets took a battering when the US-based research company Hindenburg Research issued a negative report on the Adani Group after establishing short bets. Although the business did not disclose the magnitude of its short holdings in Adani Group equities, it made outlandish claims of fraud, accounting tampering, and other wrongdoing by Adani Group for decades. The Sensex fell 1.27 percent, or 773 points, to 60,205 as a result of the news. The Nifty index dropped 1.25 percent, or 226 points, to 17,891. The decline in Indian markets resisted the global market clamour.
Following the release of the Hindenburg report, the market capitalization of Adani Group equities fell by ₹46,000 crore. “Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its seven key listed companies have 85% downside purely on a fundamental basis owing to sky-high valuations,” the report said.
Furthermore, the paper attempted to instil alarm by saying that Adani group equities had been pledged at inflated prices. Adani denied all of the charges, claiming that the study was designed to harm its ₹20,000 crore follow-on public offering.
“Any negative news on India’s large corporate houses will strongly impact the stock markets. The report spread panic especially as it came on the derivative expiry day,” a Mumbai based research analyst said.
Analysts believe that the oversubscription of Adani Enterprises FPO’s anchor book will cause markets to normalise and push the report back. Around 33 funds bid for ₹9,000 crore worth of shares, compared to the ₹6,000 crore worth of shares available for them. Among the bidders are sovereign wealth funds.
In the cash group, foreign portfolio investors (FPIs) sold equities worth ₹2,393 crore. Domestic funds purchased shares worth ₹1,378 crore. Adani Enterprises’ share price declined 1.54 percent. Adani Power has dropped by 4.99 percent. Adani Ports declined 6.3 percent, while Adani Total Gas fell 5.59 percent.