Indian tycoon Adani hit by more losses, calls for probe
Shares in troubled Adani Enterprises gyrated Friday, tumbling 30% and then rebounding after more than a week of heavy losses that have cost it tens of billions of dollars in market value.
The company, the flagship of India’s second-largest conglomerate, canceled a share offering meant to raise $2.5 billion earlier this week after U.S. short-selling firm Hindenburg Research issued a report accusing it of market manipulation and other fraudulent practices. Adani denies the allegations.
Opposition lawmakers blocked Parliament proceedings for a second day Friday, chanting slogans and demanding a probe into the business dealings of coal tycoon Gautam 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 on Friday.
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.”
At least one prominent international investor, French oil giant TotalEnergies, defended its investments in Adani. TotalEnergies said Friday it has limited exposure to the current problems and has not reevaluated its stakes in Adani businesses.
The French company said it had carried out due diligence when it making $3.1 billion in investments in Adani, and that the entities TotalEnergies invested in “are managed in accordance with applicable regulations.”
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 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%. The company’s share price has plunged more than 50% since Hindenburg released its report last week, when it stood at 3,436 rupees ($41). Stock in six other Adanilisted 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 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 Nifty and Sensex indexes were both higher on Friday.