Adani Group companies lost up to $19 billion in market value on Monday following Hindenburg Research’s claims that the Indian market regulator investigating the group has connections to offshore funds also utilized by Adani.
Billionaire Gautam Adani’s main company, Adani Enterprises, dropped 2% in morning trading, with other group companies declining between 2% and 4.5%. Adani Enterprises and Adani Ports were among the biggest decliners on India’s Nifty 50 index. The total losses for Adani companies decreased to $9 billion after the initial decline.
Hindenburg is a short-seller based in New York that got its name from the 1937 airship tragedy. When it claimed that the Adani Group had manipulated stocks and improperly used tax havens, it created one of the most spectacular revolutions in the annals of Indian business history in January 2023. By staking on a decline in share value, short sellers profit. Here, Hindenburg earned $4.1 million.
At the time, Adani refuted every accusation made against him, and after a $150 billion decline, his firms’ stock prices largely recovered. An inquiry by the Securities and Exchange Board of India (SEBI) is still ongoing.
Hindenburg stated on Saturday—quoting papers from whistleblowers—that SEBI Chair Madhabi Puri Buch and her husband had interests in an offshore fund in which friends of Gautam Adani’s brother Vinod Adani had placed a substantial sum of money.
“The allegations are resurfacing for the second time. There have been numerous investigations over the past year and a half. This reaction is likely temporary and knee-jerk. Normalcy will return,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.
Hindenburg’s accusations, according to Buch, were unfounded. On Sunday, Adani denied the new accusations as well, claiming that its international holding structure was completely open.
On Sunday, the SEBI advised investors to wait to respond to such reports with composure and thorough diligence.
The authority that Buch leads launched an investigation as a result of the initial 2023 Hindenburg report, which is currently ongoing.
On Saturday, Hindenburg declared, “We do not think SEBI can be trusted as an objective arbiter in the Adani matter.”
According to SEBI, the claims presented by Hindenburg Research against the Adani Group have been thoroughly examined.
In January, the highest court in India directed the market regulator to expeditiously conclude its inquiry and declared that additional inquiries against the group were superfluous.
Analysts noted that individual investors are uneasy about the most recent accusations made against Buch.
“We are likely to observe a short- to medium-term impact on sentiment regarding Adani stocks, particularly as retail investors face pressure from the allegations against SEBI,” said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.
The political impact of the allegations has also grown, as evidenced by Rahul Gandhi, the head of the Indian opposition, stating on X that the allegations against SEBI’s chairperson have seriously damaged the securities regulator’s integrity and ability to protect the money of small retail investors.
India’s secretary for economic affairs, Ajay Seth, declared on Monday that “a statement has been made by the concerned individual and the regulator. Not much more can be said by the government.
