Shares of a majority of Adani Group companies ended in the green on Tuesday, after a battering in the previous three trading sessions amid reports of fraud by US-based short seller Hindenburg Research.
Flagship Adani Enterprises, whose follow-on share offering managed to garner the required subscription, rose 3.4% to end at Rs 2,975, after a 4.2% gain on Monday. The stock was still below the floor price of Rs 3,112 fixed for its Rs 20,000-crore FPO.
Adani Transmission gained 3.7% on Tuesday, after losing nearly 38% in the previous three sessions. Ambuja Cements, ACC and Adani Green Energy posted gains of over 3% each.
Adani Total Gas slid another 10% after slipping 20% on Monday. Similarly, Adani Power and Adani Wilmar continued their dismal run and were down 5% each, hitting the lower circuit, as in the previous session.
The total market capitalisation of Adani Group firms rose by Rs 32,320 crore on Tuesday, after the fall over the previous three sessions had erased over Rs 5.5 trillion. Despite the gains made on Tuesday, the total market capitalisation of Adani Group companies is still down by over Rs 5 trillion over the previous Tuesday’s close.
The benchmark indices, Sensex and Nifty, ended flat on Tuesday.
Experts believe that the panic selling in Adani counters could be contained going forward, with the FPO garnering the required subscription. Further, a significant portion of the selling may have already materialised considering the thin institutional and retail holding in several of the Adani Group companies.
“The panic seen in Adani stocks in the past three sessions was missing today. The uncertainty over the FPO was a major overhang and its success should be a positive for the group stocks. The list of investors in the FPO will also be keenly watched,” said B Gopkumar, CEO, Axis Securities.
“Most of these companies are closely held, so the public participation has been limited. Not much action was seen today in the F&O space. We haven’t seen people rush to form major short positions in these counters over the past few days either,” said a derivatives analyst.
Last week, global index provider MSCI had sought feedback from its subscribers on Adani Group and its associated securities. The feedback may not necessarily translate into any specific action. But, the index provider had the option of excluding the eight Adani stocks with a cumulative weight of 5.75% in the MSCI indices, if volatility continued. The index provider could also reduce the weight of Adani Group shares by half, resulting in cumulative outflows of $1.5 billion.
Last week, US-based Hindenburg Research released a 103-page report highlighting accounting fraud, stock manipulation and improper use of offshore tax havens by the group. The firm said it had taken a short position in Adani Group companies through US-traded bonds and non-Indian-traded derivative instruments.
On Sunday, the Adani group, in a 413-page response to the allegations made by Hindenburg, said the US firm’s conduct is nothing short of a calculated securities fraud and contempt for Indian regulators and judiciary.
It said that 65 of Hindenburg’s questions related to matters already disclosed by Adani portfolio companies in their annual reports available on their websites, offering memorandums, financial statements and stock exchange disclosures. Eighteen questions related to public shareholders and third parties (and not the Adani portfolio companies), while the balance five were baseless allegations based on imaginary fact patterns.
Hindenburg, for its part, said the group was trying to lead the focus away from substantive issues and stoke a nationalist narrative, instead.