Worst day since Hindenburg: M-cap crashes 2.2 lakh crore

MUMBAI: Adani Group companies recorded their worst trading day in terms of market value on Thursday since the Hindenburg crisis in early 2023. The conglomerate’s combined market value slid by Rs 2.2 lakh crore after the US Department of Justice and the US Securities and Exchange Commission pressed widespread bribery charges against the group’s chairman and main promoter Gautam Adani and several related entities.
In comparison, on Jan 27, 2023 – two days after the US-based short seller Hindenburg Research had alleged corporate malfeasance against the group’s companies and associated people – the group’s market cap had dipped by Rs 3.2 lakh crore, a TOI analysis of BSE data showed. Thursday’s development also left Gautam Adani poorer by $12.1 billion (about Rs 1 lakh crore), with the Gujarat-based businessman’s net worth now down at nearly $58 billion, data from Forbes showed.
Currently, Adani is the 25th richest billionaire in the list, which is topped by US innovator-cum-businessman Elon Musk with a personal net worth at close to $316 billion. Among Indians, Mukesh Ambani, chairman of Reliance Industries, is the richest with personal net worth of $96.5 billion.
Among the Adani Group companies, flagship Adani Enterprises fell by nearly 23% while its market cap eroded by about Rs 73,600 crore. Other companies from the group saw a dip too, with Adani Green Energy’s stock price falling by nearly 19% and its market value by about Rs 42,000 crore. Adani Green is at the center of the US DOJ’s bribery allegations against the group’s chairman and related entities.

Among other stocks from the group, Adani Energy Solutions lost the maximum possible 20%, Adani Ports 13.5%, Adani Wilmar the maximum possible 10%, Ambuja Cements 12% and Adani Total Gas 10.4%, BSE data showed.
At a media conference with Goldman Sachs’s equity strategist for emerging markets during the day, the analyst at the financial major said that its team was watching developments at the Adani Group ‘very closely’. The US DOJ indictments and the investigations by the US SEC against some of the group’s top executives were ‘bad for investor sentiment’, he said. Among the Adani Group’s stocks, Goldman Sachs has a ‘buy’ rating on Adani Ports & SEZ.

Outside of the Adani Group stocks, leading indices were back on their sliding path on Thursday as the intensity of selling by foreign funds increased. The simmering geopolitical tension in Europe also weighed on investor sentiment, market players said.
As the negatives from Adani group’s stocks weighed on investor sentiment on Dalal Street, the sensex opened lower and briefly broke below the 77K mark to touch an intraday low at 76,803 points. At close, it was a tad higher from its earlier low and settled the session at 77,156 points, down 423 points. On the NSE, Nifty too treaded a similar path and closed at 23,350 points, down 169 points.
“Indian stock indices experienced a significant decline on Thursday, pressured by bribery charges against Gautam Adani, which further weakened already fragile investor sentiment amid unfavourable global conditions,” said Devarsh Vakil, deputy head (retail research), HDFC Securities.
The day’s selling was again led by foreign portfolio investors who recorded a net outflow of Rs 5,321 crore. In contrast, as has been the trend in recent weeks, domestic funds were net buyers at Rs 4,200 crore, BSE data showed. So far in the month, FPIs have net sold stocks worth nearly Rs 33,000 crore through the secondary market, official data showed.
During the day, several banking stocks witnessed heavy selling pressure. According to Siddhartha Khemka, head of research (wealth management), Motilal Oswal Financial Services, some banking stocks came under heavy selling pressure as investors were concerned about their exposure to Adani Group companies.
Among the larger banks, Bank of Baroda closed 3.6% lower, Canara Bank 3.3% and SBI was down 2.6%. BSE’s bankex, the sector’s index, however, was down a marginal 0.4% as most private sector banks ended with gains.
The market is expected to remain volatile in the near term due to geopolitical concerns, FPI selling and uncertainty around the outcome of state assembly elections.