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- India’s market regulator tried to assure investors the country’s markets are “stable”.
- It acknowledged there was an “unusual price movement in the stocks of a business conglomerate” in the past week.
- Adani Group companies have lost $110 billion in market cap amid a short seller attack.
India’s stock markets have been on a wild roller-coaster ride since tycoon Gautam Adani’s business empire came under siege from a US short seller.
The market rout in the share prices of Adani companies has gotten so bad that even India’s market regulator stepped into the fray on Saturday, to calm investor concerns.
The conglomerate’s flagship company, Adani Enterprises was trading 1% lower after losing as much as 10% on Monday. The stock has already lost over half its market value this year so far. The shares of Adani Transmission were down 10% while those of Adani Green Energy, Adani Power, and Adani Total Gas were down 5%.
Collectively, the rout wiped off more than $110 billion from 10 companies related to the Adani Group as of Friday, per Bloomberg.
And it’s not just Adani stocks that are getting hammered.
Jittery investors are keeping up the pressure on Indian stocks — the Sensex is trading 0.5% lower at 1.45 p.m. local time today while the Nifty 50 was down 0.5%. The benchmark Sensex and Nifty 50 indices have already lost 0.5% and 1.4% this year so far.
It’s no surprise then that the Securities and Exchange Board of India, or SEBI, said in a statement on Saturday: “The Indian financial market as represented by Sensex and Nifty has demonstrated ongoing stability and is continuing to function in a transparent, fair and efficient manner.”
What’s strange is that SEBI acknowledged it has observed an “unusual price movement in the stocks of a business conglomerate” in the past week, but did not name the company directly.
Shares of Adani Group companies have been unusually volatile since US short seller Hindenburg Research released a scathing report on January 24 alleging a “brazen stock manipulation and accounting fraud scheme” at the conglomerate. And even though Adani Group defended itself vigorously, Hindenburg also doubled down on its initial report.
Adding to Adani’s woes, S&P Global cut its outlook on two Adani companies — Adani Ports and Special Economic Zone and Adani Electricity — from stable to negative, according to a note seen by Insider. Moody’s meanwhile did not change its rating for Adani companies, but warned the sell-off in their shares could hit the group’s ability to raise funds in the next one to two years, according to a Friday note seen by Insider.
Adani Enterprises — the conglomerate’s flagship company — already scrapped a $2.5 billion secondary share sale last Wednesday. It has also shelved a $122 million bond sale, Bloomberg reported on Saturday.
The fallout from the short seller’s report also spilled over into the broader Indian markets and prompted concerns about corporate governance and debt in the country.
And even while SEBI sought to shore up investor confidence in the country’s markets by saying they have been “viewed positively by investors” — Indian equities were Asia’s top performers in 2022, according to a Reuters analysis — some analysts feel that investors might want to rebalance their portfolio in favor of other Asian markets — like China. Hong Kong’s Hang Seng Index is up 7.2% this year so far while the Shanghai Composite is up 4.8%.
The Adani Group did not immediately respond to Insider’s request for comment.