The stock market also fell for the second straight day losing over 800 points to settle at 59,331.
On Friday, Adani Enterprises lost more than 18% and is now priced at Rs 2,762, while Adani Ports crashed 16%. Adani Transmission and Adani Green Energy crashed 19.99% each while Adani Total Gas hit lower circuit of 20%. Similarly, Adani Power also hit its lower circuit of 5%.
The market valuation of Adani Total Gas plummeted Rs 1,04,580.93 crore, while that of Adani Transmission eroded by Rs 83,265.95 crore. Similarly, Adani Enterprises market capitalisation (mcap) fell by Rs 77,588.47 crore, Adani Green Energy lost Rs 67,962.91 crore and Adani Ports (Rs 35,048.25 crore).
The erosion in wealth of Adani companies is piling pressure on the group as it has also impacted investor sentiments significantly.
According to reports, volumes in these stocks were at least triple their 3-month average.
In addition, US bonds of Adani firms have also plunged in the last 2 sessions.
Sensex, Nifty plunge to 3-month low; investors lose over Rs 10.73 lakh crore
This stock market rout led to 874 points or 1.45% crash in benchmark sensex which closed at 59,331 after witnessing heavy sell off during the day. Meanwhile, the broader NSE Nifty plunged 288 points or 1.61% to settle at 17,604.
From the sensex pack, SBI, ICICI Bank, IndusInd Bank, Axis Bank and Kotak Bank were the biggest losers falling over 2% each.
Meanwhile, Tata Motors, ITC, M&M, Ultra Cemco and NTPC were the top gainers.
On the NSE platform, Nifty PSU Bank, Nifty Oil & Gas were the top losers, plunging over 5% each. Nifty Metal crashed over 4%, Banking and Financial Services also fell over 3%.
As a result, investors lost more than Rs 10.73 lakh crore in just two trading sessions.
The market capitalisation of BSE-listed firms eroded by Rs 10,73,957.29 crore to Rs 2,69,65,965.18 crore during these two trading days.
In the broader market, the BSE smallcap gauge tanked 1.89% and midcap index fell by 1.29%.
Among sectoral indices, utilities tanked 7.34%, power tumbled 6.79%, oil & gas (5.75%), energy (5.22%), telecommunication (3.79%), commodities (3.27%), bankex (3.06%) and financial services (2.48%).
Why Adani shares are crashing
For the second straight session, stocks of Adani Group companies suffered massive sell off in the domestic markets.
Things went haywire after a report by US short-seller Hindenburg Research said that it held short positions in the conglomerate. It accused the Adani Group of improper use of offshore tax havens and flagged concerns about high debt.
It alleged that Adani Group was engaged in brazen stock manipulation and accounting fraud over the course of decades.
The report also detailed a web of Adani-family-controlled offshore shell entities in tax havens spanning the Caribbean and Mauritius to the United Arab Emirates, which it claims were used to facilitate corruption, money laundering and taxpayer theft while siphoning off money from the group’s listed companies.
In response, Adani Group had dismissed the Hindenburg report as baseless and said it is considering whether to take legal action against the New York-based firm.
According to a report by Reuters, the Securities Exchange Board of India (Sebi) has increased scrutiny of deals by the Adani Group over the past year.
The market regulator will also study the report issued by Hindenburg Research to add to its own ongoing preliminary investigation into the group’s foreign portfolio investors.
The regulator had also sought clarity from the group after its acquisition of Switzerland-based Holcim Ltd’s stake in India’s Ambuja Cements Ltd and ACC Ltd, when the group had approached it for regulatory clearance last year. These responses are under regulatory examination, sources quoted by Reuters said.
In July, Sebi had initiated a probe of little-known offshore funds based out of Mauritius which had large holdings in Adani’s Group’s listed companies, which potentially raised concerns about stock price manipulation.
At the time, the regulator’s investigation hit a wall due to lack of information from jurisdictions where these funds were domiciled.
Some issues raised in the Hindenburg report also point to concerns similar to what Sebi had regarding movement of funds between parties related to the Adani Group through offshore funds back into local companies, sources said.
Adani Enterprises’ FPO
Flagship firm Adani Enterprises raised Rs 5,985 crore from anchor investors ahead of its follow on public offering (FPO) earlier this week. The FPO opened today and will close on January 31.
The FPO worth Rs 20,000 crore was oversubscribed 1.5 times by anchor investors with bids from high profile names such as Abu Dhabi Investment Authority (ADIA).
The company had set the floor price for the FPO at Rs 3,112 per share, with a price cap of Rs 3,276 apiece.
Anchor investors bid for shares worth Rs 9,000 crore ($1.10 billion) in India’s largest FPO, compared to the Rs 6,000 crore allocated to them, the source said.
Out of the Rs 20,000 crore proceeds from the FPO, Rs 10,869 crore will be used for green hydrogen projects, work at the existing airports and construction of a greenfield expressway.
An amount of Rs 4,165 crore will be utilised for repayment of debt taken by its airports, road and solar project subsidiaries.
Following the market rout, Adani’s ranking in global rich list has fallen this week.
As per Bloomberg Billionaires Index, Gautam Adani ranks at the 4th spot with a total net worth of $113 billion.
In September last year, Adani’s wealth had surged to over $155 billion, making him the 2nd richest person in global billionaires ranking and the first Indian (and Asian) to break into the top 3 list.
However, as per Forbes real-time rich list, Gautam Adani is placed at 7th position with a net worth of $96.6 billion.