Adani rout deepens despite Indian efforts to defend conglomerate

Art school teacher Sagar Kambli works on a painting by Indian businessman Gautam Adani (left) highlighting the ongoing crisis of the Adani group in Mumbai on February 3, 2023.

Indranil Mukherjee | afp | beautiful pictures

Shares of most of the Adani Group companies fell further on Monday, continuing to fall as the feud between the group and short-seller Hindenburg deepened.

Adani Enterprises lose 4%, and Transmission Adani 10% off in the morning session of Mumbai. Adani xanh Green Energy, adani’s strength And Total Gas Adani 5% off each. Port of Adani and Special Economic Zone went against the trend and traded 2% higher, but they were still volatile.

Bernstein warned of many difficulties ahead in his latest “Strategy India” report.

“There will be more volatility in India this year; therefore the market tends to correct,” wrote analyst Venugopal Garre in a note on Monday. “The best way to get such deals is to look for arbitrage in implied growth.”

Goldman Sachs repeats the same thing Nomura and HSBC in saying that the latest developments are unlikely to lead to spillover effects for the broader Indian stock market.

Goldman Sachs analysts Kenneth Ho and Chakki Ting said: “We believe credit concerns are likely to be specific and less likely to cause systemic or contagion problems. broader access to India’s foreign credit market.

They noted uncertainties surrounding Adani, saying that its outstanding US dollar bonds could hurt investor sentiment, but those concerns would “not likely have an impact”. spread more widely.”

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Adani Group’s total gross debt reached 2.2 trillion Indian rupees ($26.8 billion) as of the end of March 2022, according to the latest report. announced it was released in response to Hindenburg’s allegations of securities manipulation and fraud.

The group is likely to cancel its plans to raise around $500 million from overseas bond sales and will instead “explore other financing options,” the Economic Times of India said. report.

Meanwhile, the Bloomberg Billionaire Index showed founder and Chairman Gautam Adani’s net worth fell further on Friday. His personal wealth has more than halved this year, down 51.1%, or $61.6 billion.

‘Resilient and stable’

The Indian Securities and Exchange Commission over the weekend aimed to protect the Indian market – say two main indicators of the country demonstrated “ongoing stability” and “continued to operate in a transparent, fair and efficient manner.” 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 the integrity of the market and ensuring that the market continues to have the right structural strength to operate as uninterrupted, transparent and efficient as it has ever been.” ,” it said in a statement.

Gautam Adani, Chairman of the Adani Group, speaks during the Forbes CEO Summit in Singapore, on Tuesday, September 27, 2022.

Bloomberg | Bloomberg | beautiful pictures

Without mentioning the Adani companies by name, the regulator noted “extraordinary price movements in the shares of a business group”, adding that it was monitoring such moves.

The regulator referred to the Additional Supervisory Measures (ASM) framework, which compiles a list of companies that the regulator advises investors to “exercise extreme caution when dealing with these securities”. National Stock Exchange of India.

Several companies under the Adani Group are included in the ASM framework’s long- and short-term lists, according to a report. notice on the NSE website updated on Monday.

Adani Power is on the long-term list, while Adani Enterprises, Adani Green Energy, Adani Ports and Special Economic Zone, Adani Transmission and Adani Total Gas are on the short-term list.

SEBI’s message of stability follows the message of India’s central bank on Friday. The Reserve Bank of India said “the banking industry remains resilient and stable”, citing its own assessment of the situation. It added that it will continue to monitor the stability of the industry.

“Various parameters regarding capital adequacy, asset quality, liquidity, availability and profitability were all stable,” the RBI said in a statement on Friday. “Banks also adhere to the Large Exposure Framework (LEF) guidelines issued by the RBI.”

Indian billionaire gained weight

Anand Mahindra, Chairman of Mahindra Group, has defended the Indian economy despite the recent whirlwind of media coverage surrounding the Adani Group.

“I have lived long enough to see us face earthquakes, droughts, recessions, wars, terrorist attacks,” he wrote on Twitter Saturday, without naming the Adani Group.

“All I will say is: never bet against India,” he said.

Billionaire Uday Kotak, CEO of Kotak Mahindra Bank and India’s richest banker, also tweeted over the weekend: “I see no systemic risk to the Indian financial system since recent events.”

He noted that large Indian companies “rely more heavily on global sources for debt and equity”, adding that that leads to challenges and vulnerabilities.

“It is time to further strengthen India’s insurance business and build capacity,” he said.

– Michael Bloom of CNBC contributed to this report.


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