Shares of Adani Group companies fell as much as 17% in intraday trading on Monday as the latest report by Hindenburg Research alleged links between the group and Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch.
What was more interesting was the severe tug-of-war between the bulls and bears in most of its counters. Sample this: The turnover of Adani Enterprises stock was higher by six times higher at Rs 3,308 crore than the one-month average of Rs 528 crore.
At the same time, Adani Wilmar, NDTV, Adani Total Gas, Adani Ports and Adani Power saw 85-260% increase in turnover on Monday compared to their one-month average daily turnover.
However, the shares recovered most of the losses and ended 0.6%-4.1% down. The market capitalisation of the group companies fell by Rs 22,106 crore, or $2.6 billion, to Rs 17.02 trillion. Intraday, the group’s market cap had fallen by a whopping $15.4 billion.
The group’s flagship companies, Adani Enterprises and Adani Ports and Special Economic Zone, fell around 5% each intraday, but ended 1.1% and 2% lower, respectively.
The turnover in the shares saw a significant surge on Monday, likely propelling a recovery through the day. For instance, the turnover in Adani Enterprises was over six times higher compared to the one-month average daily turnover, data from the NSE and BSE showed.
“It was a kneejerk reaction in the morning, and post that we have seen recovery,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.
Hindenburg alleged that Buch and her husband had stakes in obscure offshore funds used in the purported Adani money siphoning scandal. Analysts do not see more downside in the Adani Group stocks unless there is any further negative development.
Deepak Jasani, head of retail research at HDFC Securities, said investors have seen that such selloffs in the past were opportunities to buy, and that may be the reason for the recovery from intraday lows.
Shares of Adani Group companies had seen a sharp fall when the US based short-seller released a scathing report, alleging accounting fraud and stock manipulation from the group. While the stocks plummeted initially, they managed to recover their losses over the year.
“We are positive on the group’s cement and ports businesses with regards to the growth potential backed by robust balance sheet and cash flows. For the rest, we do not find valuation comfort as of now,” Agrawal said.