Shares of most companies in the Adani group fell further today, and continued to fall as the feud between the conglomerate and the Hindenburg shorts company deepened. Adani Enterprises lost 4%, and Adani Transmission fell 10%. Adani Green Energy, Adani Power and Adani Total Gas fell 5% each. Adani Port and the Special Economic Zone bucked the trend and traded up 2%, but remained volatile.
The Bernstein Agency warned that there would be more blows in its latest report “India Strategy”. “There will be more volatility in India this year; hence the market is headed for a correction,” wrote analyst Venugopal Garre. “The best way to pick up such deals is to look for implied growth arbitrages.”
Goldman Sachs echoed the likes of Nomura and HSBC in saying that the latest developments are unlikely to hit the broader Indian stock market as well. “We believe the credit concerns may be idiosyncratic in nature and less likely to have wider contagion or systemic problems for India’s offshore credit market,” said Goldman Sachs analysts Kenneth Hu and Chucky Ting. Noting the uncertainty surrounding Adani, they said The company’s US dollar bonds may hurt investor sentiment, but these concerns “are not expected to have a wider impact.”
Adani Group’s total gross debt reached 2.2 trillion Indian rupees ($26.8 billion) as of the end of March 2022, according to the latest statement issued in response to Hindenburg’s allegations of share manipulation and fraud. The group may scrap plans to raise about $500 million in overseas bond sales and “explore other financing options” instead, India’s Economic Times reported. Meanwhile, the Bloomberg Billionaires Index showed founder and chairman Gautam Adani’s net worth fell further on Friday. His personal fortune has more than halved so far this year, down 51.1% to $61.6 billion.
The Securities and Exchange Board of India defended Indian markets over the weekend – saying the country’s two main indices have demonstrated “continued stability” and “continue to function in a transparent, fair and efficient manner”. The Sensex is the benchmark index of the BSE – formerly the Bombay Stock Exchange – and the Nifty 50 is the flagship index of the National Stock Exchange of India. “SEBI is committed to ensuring market integrity and ensuring that the markets continue to have the adequate structural strength to function as smoothly, transparently and efficiently as they have done so far,” the statement said.
Anand Mahindra, chairman of Mahindra Group, defended India’s economy despite negative coverage of Adani Group. “I’ve lived long enough to see us deal with earthquakes, droughts, recessions, wars and terrorist attacks,” he tweeted on Saturday, without mentioning Adani Group. “All I will say is: I will never, ever bet against India,” he said.
Billionaire Amit Uday Kotek, CEO of Kotek Mahindra Bank and India’s richest banker, also tweeted this weekend: “I don’t see a systemic risk to the Indian financial system from recent events.” He noted that large Indian companies “rely more on global sources of debt and equity financing.” , adding that this leads to challenges and vulnerabilities. “The time has come to further strengthen Indian underwriting and capacity building,” he said.
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