BENGALURU, Aug 12 (Reuters) – Adani Group companies saw a market value decline of up to $13.4 billion on Monday, but much of the loss was later recovered. This drop followed allegations by Hindenburg Research that the head of India’s market regulator had connections to offshore funds used by Adani. The conflict between Hindenburg Research and Adani Group started 18 months ago when the U.S. short-seller accused Adani of misusing tax havens, which the conglomerate has denied.
At 0850 GMT, Adani Enterprises (ADEL.NS) had decreased by 1.5%, while Adani Ports (APSE.NS), Adani Total Gas (ADAG.NS), Adani Power (ADAN.NS), Adani Wilmar (ADAW.NS), and Adani Energy Solutions (ADAI.NS) experienced declines ranging from 0.5% to 3.8%. Adani Green (ADNA.NS) saw a slight increase of 0.3%. At that time, total losses for the day were approximately $2 billion following an initial drop. After Hindenburg’s first report in January 2023, which caused a $150 billion loss in value, the stocks have since recovered much of their losses.
Adani Enterprises and Adani Ports were among the biggest decliners on the Nifty 50 index (.NSEI), which reversed its early losses to close up 0.3%. Sunny Agrawal, head of fundamental equity research at SBICAPS Securities, commented, “These allegations are resurfacing for the second time. A lot of investigations have taken place over the past year and a half. This reaction is temporary, and things will likely return to normalcy soon.”
Hindenburg Research, referencing whistleblower documents, claimed on Saturday that Securities and Exchange Board of India (SEBI) Chair Madhabi Puri Buch has a conflict of interest in the Adani case due to past investments. Buch has been SEBI’s chief since 2022. Hindenburg asserted, “We doubt SEBI’s ability to be an impartial judge in the Adani issue.” In response, Buch dismissed the allegations as unfounded, and SEBI stated that Hindenburg’s claims against the Adani Group have been thoroughly investigated.
Buch criticized Hindenburg’s allegations as an attempt at “character assassination,” following the regulator’s enforcement action and a “show cause” notice issued to the shortseller for breaching Indian regulations. A show cause notice indicates the possibility of disciplinary action if satisfactory explanations are not provided.
Adani reiterated its denial of the allegations on Sunday, asserting that its overseas holding structure is entirely transparent. These new claims emerge as Adani Enterprises prepares for a $1 billion share sale by mid-September. Earlier this month, Adani Energy secured $1 billion from U.S. investors and sovereign wealth funds. In January 2023, Adani Enterprises had to cancel a record $2.5 billion share sale due to earlier allegations from Hindenburg.
Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, noted, “We may see short to medium-term sentiment effects on Adani stocks, particularly as retail investors face pressure from the allegations against SEBI.”
The latest accusations have also gained political attention. Opposition leader Rahul Gandhi commented on X, stating, “The integrity of SEBI, the securities regulator responsible for protecting small retail investors’ wealth, has been seriously compromised by the allegations against its chairperson.”
In response, BJP lawmaker Ravi Shankar Prasad stated, “Instead of addressing the SEBI show cause notice, Hindenburg has released this unfounded report.” He added, “SEBI and the Buch family have already responded, and we have no further comment.”
