Adani issue: Group stocks register recovery, politics continues

Tribune Web Desk

Vibha Sharma

Chandigarh, February 8

Politics over Indian billionaire industrialist Gautam Adani continues to rage with the ruling BJP and the Opposition trading accusations and charges both inside and outside the Parliament following the Hindenburg Research report on the Adani Group and ensuing melt-down in its stocks on the Dalal Street.      

Leading the ante, Congress leaders accused the Narendra Modi-led BJP government of “facilitating” the rise of Gautam Adani from 609th position on the world’s richest list to the second spot in nine years. Dismissed the charges as “shameless, reckless and baseless”, BJP leaders reminded the Congress of “corruption” during the UPA regime and charges against its leaders Sonia Gandhi and Rahul Gandhi.  

Meanwhile, after the great fall, the Adani Group stocks continued on the recovery path on Wednesday following steps like prepayment of loans to instill confidence among investors. Along with reports of strong earnings by some of its companies, statements and assurances from the management over returning the FPO money and repayment of debt backed by shares pledged also helped.

Nine of 10 Adani group stocks registered profit, according to reports.

Hindenburg-Adani saga

It all started when Hindenburg Research, a US-based short-seller, published a report on January 24, accusing the Adani Group of fraud and market malpractices. Accusing Adani of pulling the “biggest con” in corporate history, the report alleged “stock manipulation and accounting fraud”.

Though the Adani Group denied all allegations, the accusations sent shockwaves in the markets, resulting in bonds and shares of the group plummeting, also touching lower circuits multiple times in a day’s trading. The crash in the stocks of its publicly listed companies resulted in a drop of Rs 9.11 lakh crore in the overall market capitalization.

The meltdown resulted in Adani Enterprises calling off its Rs 20,000 crore follow-on public offer on February 1 with a promise to return the money to investors.

Congress leader Rahul Gandhi had already been taking on Prime Minister Narendra Modi over his “closeness” to the founder of the Adani group, also a fellow Gujarati.

 The Hindenburg report gave the Congress and other opposition parties another opportunity to take offensive positions against the ruling BJP. Notably, allegations cited in the report were also noted by foreign regulatory bodies and global financial firms.

Who is Nathan Anderson? 

Hindenburg Research is a forensic financial research firm that broadly analyses equity, credit and derivatives. Founded in 2017 by Nathan Anderson, it is named after the Hindenburg airship that went up in flames in 1937.

Prior to the Adani saga, Hindenburg was best known for its report against electric truck maker Nikola Corp which generated “a big win” for him, according to reports.  

Adani issue: What next?

Given that general elections are just an year away, the Opposition is not expected to let go of the controversy in a hurry, despite the strong rebuttal by the top BJP leadership.

The Securities and Exchange Board of India (SEBI) is looking into allegations raised by Hindenburg.

Adani stocks appear to be recovering following soothing sounds by the government that everything is under control and RBI assurance on the Indian banking system.

Experts say the nature of stock markets is that recovery is almost certain with the passage of time but the narrative, whether true or false, has raised concerns over long-term credibility, creating doubts in many minds.

The market rout of Adani stock in India may also have repercussions on financial decisions involving the group in other parts of the World. The stock prices may have stabilized but the issue is far from over, they say.  

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#BJP #Gautam Adani #Hindenburg Report