Art school teacher Sagar Kambli giving final touches to a painting of Indian businessman Gautam Adani (left) highlighting the ongoing crisis of Adani Group in Mumbai on February 3, 2023.
Indranil Mukherjee | AFP | Getty Images
Shares of most of the Adani group companies fell further on Monday, as the dispute between the group and short-seller firm Hindenburg deepened.
Adani Enterprises lost 4%, and Adani Transmission Mumbai fell 10% in the morning session. Adani Green Energy, Adani Power and Adani Total Gas declined 5% each. Adani Port and Special Economic Zone bucked the trend and traded 2% higher, but remained volatile.
Bernstein warned that there would be more pain ahead in his latest “India Strategy” report.
“There will be more volatility in India this year, so there is potential for a market correction,” analyst Venugopal Gare wrote in a Monday note. “The best way to approach this type of transaction is to seek arbitrage in the underlying development.”
Goldman Sachs echoed the likes of Nomura and HSBC in saying that the latest development is unlikely to result in spillover effects for the broader Indian stock market.
Goldman Sachs analysts Kenneth Ho and Chakki Ting said in a Friday note, “We believe credit concerns are likely to be nature related in nature and suggest wider contagion or systemic issues for India’s offshore debt market.” Chances are slim.”
He noted the uncertainties surrounding Adani’s outstanding US dollar bonds could hurt investor sentiment, but those concerns “are unlikely to have a wide contagion effect.”
Adani Group’s total gross debt is set to reach 2.2 trillion Indian rupees ($26.8 billion) in 2022 by the end of March, according to the latest statement released in response to Hindenburg’s allegations of share manipulation and fraud.
The Economic Times of India reported that the group may cancel plans to raise about $500 million in overseas bond sales and will instead “explore other financing options”.
Meanwhile, the Bloomberg Billionaires Index showed that the net worth of founder and chairman Gautam Adani fell further on Friday. His personal wealth has more than halved so far this year, down 51.1% or $61.6 billion.
‘Flexible and stable’
The Security and Exchange Board of India aimed to protect Indian markets over the weekend – saying the country’s two main indices have demonstrated “ongoing stability” and “continue to operate in a transparent, fair and efficient manner”. Are.” 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 appropriate structural strength is maintained for markets to function in an uninterrupted, transparent and efficient manner,” Sebi said in a statement.
Adani Group Chairman Gautam Adani speaks during the Forbes CEO Summit in Singapore on Tuesday, Sept. 27, 2022.
Bloomberg | Bloomberg | Getty Images
Without naming the Adani companies, the regulator noted “unusual price movements in shares of a business group”, adding that it is monitoring those moves.
The regulator referred to the Additional Monitoring Measures (ASM) Framework – which compiles a list of companies about which the regulator has advised investors to be “extra cautious while dealing in these securities”, the National Stock Exchange of According to India
According to a notice updated on NSE’s website on Monday, several Adani Group-affiliated companies are included in the long- and short-term listings of the ASM framework.
Adani Power featured in the long-term list, while Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Transmission and Adani Total Gas featured in the short-term list.
Sebi’s message of stability followed that of India’s central bank on Friday. The Reserve Bank of India, citing its assessment of the situation, said that “the banking sector remains resilient and stable”. It said it would continue to monitor the stability of the industry.
“Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy,” RBI said in a statement on Friday. “The banks are also in compliance with the Large Exposures Framework (LEF) guidelines issued by RBI.”
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Mahindra Group Chairman Anand Mahindra defended India’s economy despite the whirlwind of recent media coverage surrounding the Adani Group.
“I have lived long enough to face earthquakes, droughts, recessions, wars, terror attacks,” he said in a tweet on Saturday without naming the Adani group.
He said, “I would just say this: Never bet against India.”
Fellow billionaire Uday Kotak, CEO of Kotak Mahindra Bank and India’s wealthiest banker, also tweeted over the weekend: “I do not see a systemic risk to the Indian financial system from recent events.”
He noted that large Indian companies “rely more on global sources for debt and equity finance,” adding that this leads to challenges and vulnerabilities.
“It is time to further strengthen Indian underwriting and capacity building,” he added.
— CNBC’s Michael Bloom contributed to this report.
