Embattled Gautam Adani hired a top New York legal firm to advise it on how to fight back against fraud allegations levelled by an upstart US hedge fund that has sent shares of his name-sake empire into a tailspin, according to the Financial Times.

The law firm, Wachtell, Lipton, Rosen & Katz, is one of the most sought after on Wall Street by companies facing charges of corporate mismanagement and misdeeds, the newspaper said, quoting sources.

Wachtell will mainly work on coordinating legal, regulatory and public relations for the Adani Group whose market value has plunged by over $100 billion since the investment fund, Hindenburg Research, made its explosive accusations against the group of accounting fraud, share price manipulation and money laundering, the newspaper said.

Gautam Adani has robustly denied all the allegations made by Hindenburg Research. But it has been unable to stem investor unease about his debt-heavy group’s financial health.

The report of the law firm’s hiring came Friday as the Adani Group was hit by more bad news. Ratings heavyweight Moody’s downgraded the outlook for four of Adani’s to negative from stable while the Financial Times’ influential Lex column issued a grim assessment of Gautam Adani’s future. “Adani’s star shows every sign of burning out,” the widely read column said.

The companies whose outlooks Moody’s downgraded include the group’s renewable energy arm Adani Green Energy Ltd (AGEL) and Adani Green Energy, Restricted Group-1. The other two are Adani Transmission Step-One and Adani Electricity, Mumbai.

“These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the group," Moody's said.

Adani Green Energy carries a Ba3 rating which is Moody’s lowest investment grade. A negative outlook indicates a high likelihood that the ratings could be revised downwards in the near-to-medium term. Companies with poor ratings generally find it tougher to raise loans and sell bonds for funding growth.

The change in the outlook to negative on Adani Green “considers the company's large capital spending programme and dependence on sponsor support, potentially in the form of subordinated debt or shareholder loans, which will likely be less certain in the current environment,” Moody’s said.

The Moody’s action Friday came on a day when the eight main listed Adani Group companies fell once again on the stock exchange. Trading in two was stopped soon after it began after the stocks hit the 5-per-cent-circuit breaker.

Separately, Reuters news agency reported that stock market watchdog SEBI is investigating Adani Group's links to some of the investors in the conglomerate's aborted $2.5 billion share sale.

The Securities and Exchange Board of India (SEBI) is looking into any potential violation of Indian securities laws or any conflict of interest in the share sale process, Reuters quoted sources as saying. The watchdog is investigating possible ties between the group and at least two Mauritius-based firms, the news agency said.

In other developments, Global share index provider MSCI has cut its weightings for four Adani Group companies, a move that is also weighing on Adani shares. The changes, reflecting falls in the value of Adani shares, will mean smaller weightings for the companies in MSCI index and come into effect at the end of February.

The reduced stock weightings will trigger selling of the shares by investors who track benchmark indices. Those companies affected by the MSCI weightings change are the group’s flagship, Adani Enerprises, Adani Total Gas, Adani Transmission and cement-maker ACC.