The shares of Adani Group companies saw a significant drop of up to 7% this morning, following renewed concerns stemming from the resurfacing of the Hindenburg report. The controversy, which involves allegations against SEBI (Securities and Exchange Board of India) chief Madhabi Buch, has led to heightened caution among investors, resulting in a combined loss of approximately ₹53,000 crore in market capitalization.
Market Impact: Key Data Points
- Combined Market Capitalization: The market capitalization of the 10 listed Adani Group companies fell to ₹16.7 lakh crore.
- Biggest Losers: Adani Green Energy experienced the steepest decline, with shares falling 7% to reach a day’s low of ₹1,656 on the BSE. However, the stock rebounded later in the day, trading 1% higher by the afternoon.
- Other Affected Stocks:
- Adani Total Gas: Down by 4%.
- Adani Wilmar, Adani Energy Solutions, and NDTV: Trading 2-3% lower.
- Adani Ports: Down by 2%.
- Adani Enterprises: Fell by 1%.
Hindenburg Allegations and Market Reaction
Although the latest Hindenburg report does not bring new charges against the Adani Group, it has alleged that SEBI chief Madhabi Buch and her husband Dhaval Buch held stakes in offshore funds based in Bermuda and Mauritius. These funds were allegedly used by Gautam Adani’s brother, Vinod Adani, to trade large positions in Adani Group shares.
The allegations have raised questions about SEBI’s impartiality in the ongoing investigation into the Adani Group, leading to political uproar and demands from opposition leaders for Buch’s resignation and a Joint Parliamentary Committee (JPC) probe.
SEBI’s Response and Market Analysts’ View
Madhabi Buch has denied all allegations, with SEBI issuing a statement asserting that she had made the necessary disclosures regarding her holdings and securities transfers. SEBI also emphasized that Buch has recused herself from matters involving potential conflicts of interest.
Market analysts have largely dismissed the report as “sensationalism” and do not expect it to have a lasting impact on stock prices. Dr. V K Vijayakumar of Geojit Financial Services commented that the “buy on dips” strategy, which has been effective in the current bull market, is likely to continue working.
Ongoing SEBI Investigation
Investors are also closely monitoring the progress of SEBI’s investigation into the previous Hindenburg report from last year. SEBI disclosed that out of 24 matters under investigation, one more was completed in March 2024, and the final investigation is nearing completion.
Key points from SEBI’s ongoing investigation:
- Over 100 summons issued.
- Around 1,100 letters and emails sent to gather information.
- More than 100 communications with domestic and foreign regulators.
- Examination of over 300 documents comprising approximately 12,000 pages.
Investor Advisory
SEBI has advised investors to exercise caution and due diligence before reacting to such reports. Some market participants are wary of a repeat of the market crash that followed the January 2023 Hindenburg report, which had leveled serious allegations of stock manipulation, fund siphoning, and corporate governance issues against the Adani Group.
Broader Market Impact
Despite the fallout, the broader market impact has been limited. The Sensex was trading 400 points lower, with key heavyweights such as ICICI Bank, Reliance Industries (RIL), and State Bank of India (SBI) leading the decline.
The resurfacing of the Hindenburg report and the resulting controversy have led to a significant short-term impact on Adani Group stocks. However, market analysts remain optimistic that the situation will stabilize, and investors are advised to remain cautious as developments unfold.