NEW DELHI: Once bitten, twice shy. A cautious Indian stock market on Monday successfully negotiated the second Hindenburg salvo at the Adani Group with sensex and Nifty closing marginally lower despite a highly volatile trade through the day. And, while the markets did well to survive the potential Hindenburg disruptions, the politicians were once again at daggers drawn – going all out for another round of attacks and counterattacks.
When US short seller Hindenburg Research had first targeted the Adani Group on January 24, 2023 accusing the conglomerate of orchestrating the “largest con in corporate history” by indulging in “accounting fraud and stock price manipulation,” the group companies faced a bloodbath on the bourses. Investors lost thousands of crores and within five weeks Adani Group companies market value plunged by around 65 per cent to Rs 6.7 lakh crore. In the process, Gautam Adani – group chairman as well as the second richest person in the world in late Jan 2023 – slid to below the 25th spot on the global rich list. Also his flagship Adani Enterprises had to axe its $2.5 billion follow-on public offering (FPO).
In the 18 months since then, the Adani Group slowly but steadily made a strong comeback regaining bulk of its losses triggered by Hindenburg’s allegations. In the first week of June this year, the combined market value of 10 Adani group companies stood at Rs 19.4 lakh crore. It took the group over 500 days to take its aggregate market capitalisation above the Rs 19.2 lakh crore-mark – the level it was on Jan 24, 2023.
The Adani group got a big boost with the Supreme Court ruling out investigations by market regulator Securities and Exchange Board of India (Sebi). In a detailed order passed on January 3, the Supreme Court said that reports prepared by third-party organisations such as the Organized Crime and Corruption Reporting Project (OCCRP) and Hindenburg Research cannot be regarded as “conclusive proof”. The Supreme Court later also dismissed a review petition filed against its January 3 verdict refusing to form any SIT or group of experts to conduct an investigation into the Adani-Hindenburg controversy.
The stage for Round 2 of Hindenburg attack was set on August 10, when the US short seller posted on X saying, “Something big soon India”. This time around the target was Sebi itself that probed allegations against Adani Group. They released a report which claimed that Sebi chairperson Madhabi Puri Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani to round-trip funds and inflate stock prices. The report also alleged that Sebi chief’s involvement showed a lack of transparency in the market regulator when it came to investigating the Adani group.
These allegations were refuted by Buch and her husband, who issued a statement calling Hindenburg’s latest tirade an attack on the credibility of Sebi and attempted “character assassination”. Adani Group also rejected the report and termed the allegations malicious and manipulative of select public information. And finally, the Sebi also issued a statement and said Buch has made “relevant disclosures” from time to time, and also recused herself in matters involving potential conflicts of interest.
Perhaps these denials and also the memories of January 23 impact ensured relative calm in the market on Monday amid apprehensions of another crash.
Shares of eight Adani group firms ended lower on Monday after facing severe drubbing during the morning trade. At close of trade, the stock of Adani Wilmar slumped 4.14 per cent, Adani Total Gas went lower by 3.88 per cent, Adani Energy Solutions dropped 3.70 per cent, NDTV fell by 3.08 per cent, Adani Ports dipped 2.02 per cent, Adani Enterprises declined 1.09 per cent, ACC (0.97 per cent) and Adani Power (0.65 per cent) on the BSE.
However, two of the group firms bounced back, with Ambuja Cements climbing 0.55 per cent and Adani Green Energy rising by 0.22 per cent.
But while the markets reacted with caution, the politicians picked up from where they had left after the Round 1.
The Congress was quick to cite the conflict of interest and question the veracity of Sebi probe against Adani Group. It urged the Supreme Court to transfer the Adani probe to the CBI or a Special Investigation Team given the “likelihood of Sebi’s compromise”. The grand old party also demanded a Joint Parliamentary Committee probe into the allegations and threatened a nation-wide stir if the demand was not met. The other opposition parties also joined the Congress in demanding immediate resignation of Sebi chief and alleged a massive scam.
However, the BJP came out strongly against Hindenburg Research and rejected the demand for a JPC probe. The BJP accused the grand old party of weakening the Indian economy and destroying investment in the country. BJP leader and former Union minister Ravi Shankar Prasad reiterated the party’s line that the short-selling firm’s allegations and the opposition’s criticism of the market regulator are part of a wider conspiracy.
While India is being globally seen as a safe, stable and promising market, the Congress party wants the stock market to crash and project that the Indian investment scenario is not safe, he alleged, suggesting that the opposition party was seizing on the “chits” provided by foreign entities to damage the economy.
The BJP also linked Hindenburg Research to billionaire investor George Soros and his propaganda against the government led by Prime Minister Modi.
Clearly, while the economic impact of Hindenburg revelations may now be limited as the investors and markets have become cautious, the political impact of this may be far from over.
(With inputs from agencies)
When US short seller Hindenburg Research had first targeted the Adani Group on January 24, 2023 accusing the conglomerate of orchestrating the “largest con in corporate history” by indulging in “accounting fraud and stock price manipulation,” the group companies faced a bloodbath on the bourses. Investors lost thousands of crores and within five weeks Adani Group companies market value plunged by around 65 per cent to Rs 6.7 lakh crore. In the process, Gautam Adani – group chairman as well as the second richest person in the world in late Jan 2023 – slid to below the 25th spot on the global rich list. Also his flagship Adani Enterprises had to axe its $2.5 billion follow-on public offering (FPO).
In the 18 months since then, the Adani Group slowly but steadily made a strong comeback regaining bulk of its losses triggered by Hindenburg’s allegations. In the first week of June this year, the combined market value of 10 Adani group companies stood at Rs 19.4 lakh crore. It took the group over 500 days to take its aggregate market capitalisation above the Rs 19.2 lakh crore-mark – the level it was on Jan 24, 2023.
The Adani group got a big boost with the Supreme Court ruling out investigations by market regulator Securities and Exchange Board of India (Sebi). In a detailed order passed on January 3, the Supreme Court said that reports prepared by third-party organisations such as the Organized Crime and Corruption Reporting Project (OCCRP) and Hindenburg Research cannot be regarded as “conclusive proof”. The Supreme Court later also dismissed a review petition filed against its January 3 verdict refusing to form any SIT or group of experts to conduct an investigation into the Adani-Hindenburg controversy.
The stage for Round 2 of Hindenburg attack was set on August 10, when the US short seller posted on X saying, “Something big soon India”. This time around the target was Sebi itself that probed allegations against Adani Group. They released a report which claimed that Sebi chairperson Madhabi Puri Buch and her husband had undisclosed investments in obscure offshore funds in Bermuda and Mauritius, the same entities allegedly used by Vinod Adani to round-trip funds and inflate stock prices. The report also alleged that Sebi chief’s involvement showed a lack of transparency in the market regulator when it came to investigating the Adani group.
These allegations were refuted by Buch and her husband, who issued a statement calling Hindenburg’s latest tirade an attack on the credibility of Sebi and attempted “character assassination”. Adani Group also rejected the report and termed the allegations malicious and manipulative of select public information. And finally, the Sebi also issued a statement and said Buch has made “relevant disclosures” from time to time, and also recused herself in matters involving potential conflicts of interest.
Perhaps these denials and also the memories of January 23 impact ensured relative calm in the market on Monday amid apprehensions of another crash.
Shares of eight Adani group firms ended lower on Monday after facing severe drubbing during the morning trade. At close of trade, the stock of Adani Wilmar slumped 4.14 per cent, Adani Total Gas went lower by 3.88 per cent, Adani Energy Solutions dropped 3.70 per cent, NDTV fell by 3.08 per cent, Adani Ports dipped 2.02 per cent, Adani Enterprises declined 1.09 per cent, ACC (0.97 per cent) and Adani Power (0.65 per cent) on the BSE.
However, two of the group firms bounced back, with Ambuja Cements climbing 0.55 per cent and Adani Green Energy rising by 0.22 per cent.
But while the markets reacted with caution, the politicians picked up from where they had left after the Round 1.
The Congress was quick to cite the conflict of interest and question the veracity of Sebi probe against Adani Group. It urged the Supreme Court to transfer the Adani probe to the CBI or a Special Investigation Team given the “likelihood of Sebi’s compromise”. The grand old party also demanded a Joint Parliamentary Committee probe into the allegations and threatened a nation-wide stir if the demand was not met. The other opposition parties also joined the Congress in demanding immediate resignation of Sebi chief and alleged a massive scam.
However, the BJP came out strongly against Hindenburg Research and rejected the demand for a JPC probe. The BJP accused the grand old party of weakening the Indian economy and destroying investment in the country. BJP leader and former Union minister Ravi Shankar Prasad reiterated the party’s line that the short-selling firm’s allegations and the opposition’s criticism of the market regulator are part of a wider conspiracy.
While India is being globally seen as a safe, stable and promising market, the Congress party wants the stock market to crash and project that the Indian investment scenario is not safe, he alleged, suggesting that the opposition party was seizing on the “chits” provided by foreign entities to damage the economy.
The BJP also linked Hindenburg Research to billionaire investor George Soros and his propaganda against the government led by Prime Minister Modi.
Clearly, while the economic impact of Hindenburg revelations may now be limited as the investors and markets have become cautious, the political impact of this may be far from over.
(With inputs from agencies)