The freefall of the Adani Group shares in the past couple of days following the publication of the Hindenburg Research’s report has the markets and investors worried.
Three of the 10 stocks fell as much as 20% each to hit the lower circuit breaker.
The two-day sell-off left the group’s shareholders poorer by $51.6 billion or about Rs 4.2 lakh crore, BSE data showed.
Adani Group’s statement not convincing enough
While Adani Group has vehemently denied the allegations made by the US-based investment research firm, which accused it of market manipulation and threatened to take legal action, it has failed to convince investors who dumped the shares, fearing that the value will drop further.
Even billionaire hedge fund manager Bill Ackman was not convinced by the explanations by Adani Group and called the Hindenburg report “highly credible and well-researched”.
Investors lost Rs 10.73 lakh crore
In the report published on Tuesday, New York-based Hindenburg Research, a short-seller, had accused Adani of pulling the largest con in corporate history.
Since Wednesday, investors’ wealth eroded by more than Rs 10.73 lakh crore in just two trading sessions as the market slumped and benchmark BSE Sensex slid 1,647.85 points.
For the second straight session on Friday, the 30-share Sensex tumbled 874.16 points or 1.45 per cent to settle at 59,330.90 points. During the day, the key index plunged 1,230.36 points or 2.04 per cent to 58,974.70 points.
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On Wednesday, the BSE barometer plummeted 773.69 points or 1.27 per cent to 60,205.06 points.
LIC, SBI other banks caught in turmoil
It is not just individual investors who are counting their losses.
Life Insurance Corporation (LIC) of India, which had a massive shareholding in Adani group stocks, lost Rs 16,580 crore in two days.
Some of India’s leading public sector banks, including SBI and Bank of India, have an exposure of around Rs 80,000 crore to the Adani Group, which is 38 per cent of the group’s total debt.
Not at risk, say SBI
SBI said on Friday that its exposure to the Adani Group was well below the Reserve Bank of India’s (RBI) Large Exposure Framework and was secured by cash-generating assets.
“While, as a matter of policy, we don’t comment on individual clients, in the interest of setting the context right, we wish to clarify that SBI’s exposure to Adani Group is well below the Large Exposure Framework. All exposure to the group from SBI is secured by cash-generating assets with adequate TRA/Escrow mechanism in place, hence debt service will not be a challenge,” said Swaminathan J., MD of corporate banking and subsidiaries at SBI, in a statement.
Loans within limits: BoI
Bank of India also said that the lender’s loans to the Adani group were within permissible limits, while executives at two other private lenders said that they were not yet in “panic mode” but were being watchful.
“Our exposure to the Adani Group is below the large exposure framework of the Reserve Bank of India,” an executive at the Bank of India told Reuters on conditions of anonymity.
“Till last month, the Adani Group’s interest payment on loans has been intact.”
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