Indian markets are very well regulated, stresses minister
The government has not hing t o do wit h the mater, says Joshi
Indian Finance Minister Nirmala Sitharaman said on Friday her country’s markets were “well regulated” and she did not expect the controversy around tycoon Gautam Adani’s business empire to affect investor confidence.
Meanwhile, Adani denied that his rise to become Asia’s richest man — a title he has lost in a phenomenal stock rout — was due to Prime Minister Narendra Modi, as shares in his conglomerate fell again.
The combined market cap of Adani Group’s listed units has collapsed by more than $120 billion — about half of the group’s value — since US short-seller Hindenburg Research released an explosive report last week.
It accused Adani of accounting fraud and artificially boosting its share prices, calling it a “brazen stock manipulation and accounting fraud scheme.”
India remained “an absolutely well governed” country and a “very well regulated financial market,” Sitharaman told broadcaster News18.
“One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,” Sitharaman said.
Sitharaman said public sector financial institutions had released detailed statements showing they had limited exposure to Adani Group and would not be significantly affected by the share crash.
“I think the investor confidence which existed before shall continue even now,” she added.
Shares in troubled Adani Enterprises gyrated on Friday, tumbling 30% and then rebounding ater more than a week of heavy losses that have cost it tens of billions of dollars in market value.
Earlier during the day, opposition lawmakers blocked Parliament proceedings for a second day Friday, chanting slogans and demanding a probe into the business dealings of Adani, who is said to enjoy close ties with Prime Minister Narendra Modi.
“We have no connection with the Adani controversy, Parliamentary Affairs Minister Pralhad Joshi told reporters outside Parliament.
Amit Malviya, the governing Bharatiya Janata Party’s information and technology chief, said in a television interview that the opposition was using Adani’s crisis to target the Modi government over a private company’s shares and their market movements. “Regulators are looking into” what happened, he said.
The market watchdog, the Securities and Exchange Board of India, has not commented. The Economic Times newspaper reported, citing unnamed SEBI sources, that it had asked stock exchanges to check for any unusual activity in Adani stocks.
Shares in Adani Enterprises fell as much as 30%, to Rs1,017 ($12), on Friday. At the end of trading, the price had recovered to Rs1,531 ($18.70) but was still down by 2%. The company’s share price has plunged more than 50% since Hindenburg released its report last week, when it stood at Rs3,436 ($41). Stock in six other Adani-listed companies was down 5% to 10% on Friday.
So far there has been no indication that the company’s woes might threaten the wider financial sector in India. Its equities market is large enough to sustain the fallout at this moment, said Brian F re it as, a new zealand-based analyst with periscope Analytics who has researched the Adani Group.
“Adani stock forms a small part of the equities market and investor concerns right now are restricted to the company, not the whole system or marketo itself,” Freitas said. India’s Nity and Sensex indexes were both higher on Friday.
It could take time for problems to surface, Shilan Shah of Capital Economics said in a report. “From the macro perspective there are few signs of contagion,” he said. “But it is too early to sound the all clear.”
Gautam Adani, who made a vast fortune mining coal and trading before expanding into construction, power generation, manufacturing and media, was Asia’s richest man and the world’s third wealthiest before the troubles began with Hindenburg’s report.
By Friday, his net worth had halved to $61 billion, according to Bloomberg’s Billionaire Index, where he dropped to the 21st spot worldwide.
He has said litle publicly since the troubles began, though in a video address ater Adani Enterprises cancelled its already fully subscribed share offering he promised to repay investors. The company has said it is reviewing its fundraising plans.
‘One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed,’ says Sitharaman; opposition MPS disrupt parliament over issue.
The Lok Sabha was adjourned for the day on Friday amid protests by Congress-led opposition demanding probe into Hindenburg’s report alleging fraud against Adani group.
As soon as the Lower House reconvened at 2pm, members from the Congress, All India Trinamool Congress, DMK and JD (U) stormed into the well of the House, raising slogans like “Adani Sarkar Hai Hai!” and “We Want JPC!” Rajendra Agrawal, who was in the chair, urged the protesting members to return to their seats and allow the House to function.
However, as the protests continued, the House was adjourned for the day.
Earlier in the morning too, the Lower House could not transact any business owing to disruptions by the Opposition and was adjourned till 2pm.
On Thursday also, both the Houses were adjourned without transacting any business.
Parliamentary Affairs Minister Pralhad Joshi on Friday said that the government has nothing to do with the mater and the opposition is raising it as it is beret of issues.
In an interview with CNN News 18, Finance
Minister Nirmala Sitharaman brushed off concerns that the losses would spook global investors and said India’s financial market was “very well regulated.” “As a result, the investors’ confidence which existed before shall continue even now,” she said, adding that the controversy wasn’t “indicative of how well Indian financial markets are governed.” Amit Malviya, the governing Bharatiya Janata Party’s information and technology chief, said in a television interview that the opposition was using Adani’s crisis to target the central government over a private company’s shares and their market movements. “Regulators are looking into” what happened, he said.
The market watchdog, the Securities and Exchange Board of India, has not commented.
The Economic Times newspaper reported, citing unnamed SEBI sources, that it had asked stock exchanges to check for any unusual activity in Adani stocks.
Shares in Adani Enterprises fell as much as 30 per cent, to 1,017 rupees ($12), on Friday.
At the end of trading, the price had recovered to 1,531 rupees ($18.70) but was still down by 2 per cent.
The company’s share price has plunged more than 50 per cent since Hindenburg released its report last week, when it stood at 3,436 rupees ($41). Stock in six other Adani-listed companies were down 5 per cent to 10 per cent on Friday.
So far there has been no indication that the company’s woes might threaten the wider financial sector in India.
Its equities market is large enough to sustain the fallout at this moment, said Brian Freitas, a New Zealand-based analyst with Periscope Analytics who has researched the Adani Group.
“Adani stock forms a small part of the equities market and investor concerns right now are restricted to the company, not the whole system or market itself,” Freitas said.
India’s Nity and Sensex indexes were both higher on Friday.
It could take time for problems to surface, Shilan Shah of Capital Economics said in a report.
“From the macro perspective there are few signs of contagion,” he said. “But it is too early to sound the all clear.” The S&P Dow Jones indices said on Thursday it would remove Adani Enterprises from its sustainability indices beginning on Tuesday, following a “media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud.” That might dent the Adani Group’s sustainability credentials and could affect investor sentiment, Freitas said.
Meanwhile, sixteen opposition parties on Friday came together to chalk out a strategy in Parliament on the Hindenburg-adani issue.
The parties met at the chamber of Mallikarjun Kharge, the Leader of Opposition, in Parliament premises.
Apart from the Congress, the DMK, Samajwadi Party (SP), AAP, BRS, Shiv Sena (Uddhav Thackrey group), RJD, JD(U), CPI(M), CPI, NCP, NC, IUML, Kerala Congress (Jose Mani), Kerala Congress (Thomas), and RSP atended the opposition parties meeting.
The joint opposition demand is to constitute a joint parliamentary commitee (JPC) to probe the loss of money to the Public Sector Banks and LIC.