The stock markets swooned on Wednesday after Hindenburg Research — an activist US-based short seller — ignited a controversy over the state of affairs in the Adani group with the bellwether indices tumbling by over 1 per cent as investors scurried for cover to avoid a sudden valuation downwash that wiped out paper wealth of over Rs 3.66 lakh crore in frenzied trading.
The Adani stocks bore the brunt of the storm though analysts reckoned that they would recover after the damning indictment of the financial irregularities within the group, corporate governance lapses and accusations of stock price manipulation.
The shares recouped some of their losses after the conglomerate rejected the report and said it was timed to damage the follow-on public offering (FPO) of Adani Enterprises Ltd, which opens for subscription on January 27 and closes on January 31.
The Sensex on Wednesday fell 1.24 per cent, or 774 points, to close at 60205.06, while the Nifty tumbled 1.25 per cent, or 226.35 points, to 17891.95 points.
With the Adani stocks coming under pressure, the overall sentiment took a hit resulting in the benchmark index slumping more than 897 points during intra-day trades.
Market circles said the F&O expiry and investor nervousness over the upcoming Union budget also led to the fall in share prices.
According to a Bloomberg report, shares in Adani companies lost $12 billion. The worst hit was Adani Transmission, which slumped 8.06 per cent to close at Rs 2,534.10 on the BSE.
Adani Enterprises fell 1.54 per cent to Rs 3,389.85 after staging a smart recovery from a low of Rs 3,315.70, down nearly 3.70 per cent from the previous close.
The other group stocks that ended in the red included Adani Ports and SEZ (6.30 per cent), Adani Power (4.99 per cent), Adani Green Energy (3.04 per cent), Adani Total Gas (3.61 per cent) and Adani Wilmar, 5 per cent.
An analyst from a foreign brokerage who did not wish to be identified said the Adani stocks is facing headwinds in the form of high valuations — which have been partly addressed by the fall in their prices on Friday.
The counters may recover over the next few sessions, the analyst said, adding investors can selectively look at the group stocks with a long-term horizon in mind. The Adani Enterprises FPO may get a good response because of the discount given to retail investors, the analyst said.
Arun Kejriwal, director, KRIS, an investment research firm, said controversies ahead of a massive public issue is not new to the market.
He said Adani Enterprises is unlikely to encounter any major hiccups because of the report and the anchor book is likely to be dominated by foreign portfolio investors.
Brokerages such as Investmentz has recommended that investors subscribe to the Adani Enterprises FPO.
“With its continuous focus on becoming the leading manufacturer of green hydrogen and increasing number of operating mines, we believe Adani Enterprises is well placed to capitalise on domestic and international opportunities.”
“On the financial performance front, over 2018-19 to2021-22, it has reported a 20per cent CAGR (compounded annual growth rate) growth in the topline. Hence, we recommend subscribing to the issue from a long-term prospective,’’ the brokerage said in a note.
Anchor funding
Adani Enterprises on Wednesday said it has raised Rs 5,985crore from anchor investors ahead of its follow-on public offering. The company has decided to allot a total of 1.8 crore equity shares to 33 funds at Rs3,276 apiece, taking the transaction size to Rs 5,985 crore, according to a circular uploaded on the BSE website.
Foreign investors who have been allocated shares include Abu Dhabi Investment Authority, BNP Paribas Arbitrage, Societe Generale, Goldman Sachs Investment(Mauritius), Morgan Stanley Asia (Singapore) Pte, Nomura Singapore and Citigroup Global Markets Mauritius.
