Shares of some Adani group firms  continue sharp  decline

Investors in Adani group stocks have now lost approximately ₹5.7 trillion ($70 billion) following the release of the Hindenburg report alleging accounting fraud and manipulation last week.

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However, the rise in Adani Enterprises, an index constituent, contributed partly to the benchmark Nifty and Sensex indices closing in the green after a turbulent session.

The Nifty gyrated 304 points between the day’s high and low before ending trading at 17,648.95, a 0.25% gain, while the Sensex swung 945 points before closing 0.29% higher at 59,500.41 amid the turbulence in the Adani stocks.

Investors in Adani Group stocks suffered a combined loss of ₹1.39 trillion in wealth on Monday, with trading in Adani Total Gas, Adani Green, Adani Power, Adani Wilmar, and NDTV halted after they hit their respective lower circuits, which range from 5-20%. Though Adani Enterprises closed up almost 5% at ₹2,892.85 apiece, it still traded at a 7% discount to the FPO floor price of ₹3,112.

Given the heightened volatility, the exchanges have halved the price band in Adani Transmission, Adani Green and Adani Total Gas to 10%.

With just a day left for the ₹20,000 crore FPO to close, analysts see the recovery in Adani Enterprises as key to drawing retail and HNI participation.

The loss of investor wealth in other group stocks resulted in the Adani Group market cap trailing that of Reliance Industries and its units for the second straight session— ₹13.36 trillion versus RIL’s ₹16.18 trillion—and in founder Gautam Adani slipping a notch to No. 8 on the Forbes Billionaire list with a net worth of $88.2 billion. While Adani still rules two places above Reliance Industries’ chairman Mukesh Ambani, with a net worth of $84.1 billion, the lead narrowed to around $4 billion from $13 billion on Friday.

Adani Enterprises remained among the top three stocks traded on the derivatives segment on Monday, while another group stock, Ambuja Cements, remains banned for fresh derivatives trades on the NSE.

Market veterans remained guarded in their comments when asked about their views on the tussle between bulls and bears on the Adani counters and its impact on the market ahead of the Union budget and the US Fed policy meeting.

“There has been encouraging response from certain qualified institutional bidders in the Adani Enterprises’ FPO, but more clarity will emerge once the FPO closes tomorrow,” said Amit Gupta, fund manager, Isec PMS.

“It’s difficult to make a near-term call because that will be determined by the success of the FPO and quality of the money it attracts,” said Gaurav Dua, senior vice-president, head of capital market strategy, Sharekhan by BNP Paribas. “The controversy triggered by Hindenburg has impacted banking stocks, which have a significant weighting in the benchmark Nifty index, whose range has dipped to 17,300-17,800 from 17,800-18,000 in its aftermath. Apart from this, there are a host of events this week, like the budget, and the US FOMC meeting, which could increase the volatility.”

The market volatility was underscored by foreign portfolio investors’ net selling of a provisional ₹6,793 crore even as domestic institutional investors purchased a provisional ₹5,513 crore of shares.

After the volatile session, insurance company Life Insurance Corp. of India clarified that its exposure to Adani Group as of date was 0.975% of its total assets under management at book value.

LIC’s total equity purchase value of Adani group stocks over the last many years is ₹30,127 crore, and the market value for the same as of 27 January was ₹56,142 crore. The total amount invested under the Adani group amounts to ₹36,474.78 crore as of date. These investments have, however, been made over a period.

Adani Enterprises and the Bajaj twins led the gains in the Nifty, rising 2-5% after strong December quarter numbers.

“The response by Adani had a mixed effect on the stock group and market,” said Vinod Nair, head of research at Geojit Financial Services. “The saga is likely to continue as a hanging risk in the investors’ minds in the medium term. To expect a scientific assessment report either by a strong independent third party or government is dim in the short term. Now the market will focus on budget and Fed policy.”