Adani shares plunge on US probe news
Adani group shares plunged the most by value in four months after Bloomberg reported that US authorities, including the department of justice and the Securities and Exchange Commission (SEC), launched an investigation into the conglomerate’s statements to American investors following short-seller Hindenburg Research’s allegations against it.
The combined market value of 10 group companies fell by $5.9 billion to $119.5 billion, marking the steepest decline since 22 February, when it slid by $6.3 billion to $91.43 billion. Adani Enterprises and Adani Ports, both Nifty stocks, registered a 6.83% and 4.2% decrease, respectively, in response to the report. Other notable losers were Ambuja Cements, Adani Power, and Adani Transmission, which experienced declines ranging from 4.3% to 5.8%.
An Adani group spokesperson said it was unaware of such a development. “We are not aware of any such subpoena to investors. Our various issuer groups remain confident that the disclosures are full and complete as disclosed in the relevant issuer offering circulars,” the spokesperson said. “We strongly reject any suggestion that Adani group and its businesses have not acted as per the regulations and accounting standards of the jurisdictions in which they operate.”
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Despite the group’s clarification, speculators had a field day on the cash counters of the two group heavyweights.
A total of 15.2 million Adani Enterprises shares were traded on NSE on Friday, the highest since 9 February, while just 1.89 million shares changed hands, showing that traders squared off their bets before the market closing.
On Adani Ports, the number of shares traded of 15.4 million was the highest since 15 March, when 15.5 million shares changed hands. Here, too, delivery volumes were just 39%, indicating heightened speculation.
The active futures contract of Adani Ports also witnessed the creation of fresh bearish bets as the outstanding positions rose 6.58% alongside the price correction in the contract by over 4%. A rise in positions, along with price correction, indicates a bearish build-up.
“Whatever recovery has been seen in the group stocks from the lows post-Hindenburg has not resulted in the desired revival of investor confidence,” said Rajesh Palviya, technical head research at Axis Securities. “Those with a low risk appetite should avoid these stocks as they are given to sharp movements based on news flows.”
Bloomberg also reported that 12 of the 15 dollar bonds of the Adani Group declined intraday following the news, with Adani Green bonds maturing in September 2024 leading the losses.
“Adani operates a robust corporate governance framework and is strongly committed to following all laws and regulations in all of its different markets,” the spokesperson added. “We request the media to avoid needless speculation at this time and wait for Sebi and the Hon’ble Supreme Court to complete their work and submit their findings.”
Hindenburg, in a report on 24 January, alleged corporate malfeasance against the group, which it denied strongly. A Supreme Court-appointed committee also said there was no prima facie evidence of wrongdoing by the group.
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Updated: 24 Jun 2023, 12:26 AM IST
