The Indian stock regulator tried to calm nervous investors fleeing the stock market, but even this did not help Gautam Adani, whose company shares continue to fall.
- India’s market regulator tried to reassure investors that the country’s markets were “stable”.
- He acknowledged that last week there was “an unusual movement in the price of shares of a business conglomerate.”
- Adani Group companies lost $110 billion in market capitalization due to the attack by short sellers.
Indian stock markets have been on a wild roller coaster ride since tycoon Gautam Adani’s business empire came under siege by a US short seller.
The drop in market prices for Adani’s shares has become so severe that even India’s market regulator stepped in on Saturday to assuage investors’ concerns.
The conglomerate’s flagship company, Adani Enterprises, traded down 1% after losing as much as 10% on Monday. The stock has already lost more than half of its market value this year. Adani Transmission shares fell 10%, while Adani Green Energy, Adani Power and Adani Total Gas shares fell 5%.
More than $110 billion has been wiped out in the crash of 10 companies linked to the Adani Group as of Friday, according to Bloomberg.
And it’s not just about Adani stocks.
Nervous investors continue to weigh on Indian equities, with the Sensex trading down 0.5% at 13:45 local time today and the Nifty 50 down 0.5%. The underlying indices Sensex and Nifty 50 have already lost 0.5% and 1.4% this year.
Therefore, it is not surprising that the Securities and Exchange Board of India, or SEBI, said in a statement on Saturday: “The Indian financial market, represented by Sensex and Nifty, has demonstrated continued stability and continues to operate transparently, fairly and efficiently. manner.”
Strangely, SEBI acknowledged that it had seen “unusual price movements in the business conglomerate’s stock” last week, but did not name the company directly.
Shares of Adani Group companies have been extraordinarily volatile after U.S. short selling company Hindenburg Research released a scathing report on January 24 alleging that the conglomerate has “brazen stock scams and accounting fraud.” And while the Adani Group defended vehemently, Hindenburg also doubled down on its original position.
Adding to Adani’s woes, S&P Global cut its outlook on two of Adani’s companies – Adani Ports and Special Economic Zone and Adani Electricity – from stable to negative, according to a note seen by Insider. Meanwhile, Moody’s has not changed its rating for the Adani companies, but warned that a sell-off in their shares could affect 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 backed out of a $2.5 billion secondary share sale last Wednesday. He also delayed a $122 million bond sale, Bloomberg reported Saturday.
The effects of the short seller’s report also spilled over to broader Indian markets and raised concerns about corporate governance and debt in the country.
And even though SEBI has sought to bolster investor confidence in the country’s markets by saying they have been “positively viewed by investors” – according to Reuters analysis, Indian stocks were the best in Asia in 2022 – some analysts believe that investors may want to change balance. its portfolio to other Asian markets such as China. Hong Kong’s Hang Seng is up 7.2% this year, while the Shanghai Composite is up 4.8%.
Adani Group did not immediately respond to an Insider request for comment.
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