Adani Group shares rout: This week’s top developments

Adani group stocks have been on a downward spiral as a result of the scathing Hindenburg report which accused the Adani group of “brazen stock manipulation and accounting fraud” The Adani group slammed the accusations, calling them baseless and discredited allegations. The group also threatened legal action and provided a 400-page rebuttal. However, Hindenburg research continues to stand by its report. Here are the top 10 developments of the week.

RBI Issues Statement
The Reserve Bank of India has issued a statement saying that as per its current assessment, the banking sector remains resilient and stable. RBI says “there have been concerns over exposure of banks to a business conglomerate.” The statement goes on to say that the RBI maintains a constant vigil and continues to monitor the banking sector.

FM Sitharaman reacts to Adani group row
Finance Minister Nirmala Sitharaman, on Friday, reacted to the controversy surrounding the Adani group. In an interview to News18, FM said that India’s financial sector was very well regulated, and that investor confidence won’t be affected. "India remains as before, absolutely well-governed with a stable government and a well-regulated financial market.” On the issue of LIC and SBI’s exposure to Adani group companies, FM said that both SBI and LIC have issued detailed statements and have explained how they are not overexposed and are sitting on profits for the exposure that they have.

Adani Group shares’ spiral
Since the 25th of January, after the Hindenburg report was released, Adani group stocks have seen a massive fall. The Adani group’s market capitalization has been eroded by over $100 billion since then. As of Friday’s close, 7 Adani group stocks have fallen anywhere between 30% to 55% in the last 10 days.

Adani Ports added to NSE’s F&O ban list
2 Adani group stocks – Adani Ports & Ambuja Cements were added to NSE’s F&O ban list for Friday. This ban rule helps reduce speculation in stocks as traders are not allowed to take fresh positions.

3 Adani Group stocks placed under additional watch by NSE
National Stock Exchange places Adani Enterprises, Adani Ports & Ambuja Cements under additional surveillance mechanism, to curb speculation and short-selling. Trading in their shares will require a 100% margin.

Adani Enterprises to be removed from Dow Jones sustainability indices
S&P Dow Jones said it would remove Adani Enterprises from the widely used sustainability indices with effect from February 7th. In a statement, S&P Dow Jones said, “Adani Enterprises will be removed from the Dow Jones Sustainability Indices following a Media & Stakeholder Analysis triggered by allegations of stock manipulation and accounting fraud.”

Gautam Adani in talks to prepay & release pledged shares
Adani Group Chairman, Gautam Adani is in talks with lenders to prepay and release pledged shares in an effort to restore confidence, as per a Bloomberg report.

RBI seeks details from banks on Adani exposure
The Reserve Bank of India has sought details from banks over their exposure to the Adani group companies, as per a Reuters report. However, there has been no official confirmation from the central bank so far.

Uproar in Parliament over Adani rout
Both the Lok Sabha and Rajya Sabha were adjourned till Monday, after a massive uproar over the plunge in Adani group share prices. Opposition demand a discussion on the risk to Indian investors. Demands for a parliamentary panel probe were also raised.

Gautam Adani out of world’s top 20 rich list
From being the 2nd richest in the world just a few weeks ago, Gautam Adani has now been knocked off the world’s top 20 rich list as well.

Adani Enterprises FPO called off
On 1st of February, Adani Enterprises withdrew its follow-on public offering, despite the FPO being fully subscribed. The company cited ‘unprecedented circumstances’ and market volatility and said the money would be returned to shareholders. In fact, for the first time amid the entire controversy, Chairman, Gautam Adani spoke out, saying that it wouldn’t be morally correct to proceed with the FPO.