Adani Group's rout impacting India? 7 points you need to know
2 min read . Updated: 06 Feb 2023, 11:30 AM IST
Premium- The sell-off in Adani Group stocks continued on Monday
Industrialist Gautam Adani, who started the year as world's second richest, has seen his fortune fall significantly and sliding to number 21 in the Bloomberg Billionaires index, amid the heavy selloff in his Group stocks that have wiped out about half of the conglomerate's worth in just a week, triggered by the US-based short-seller Hindenburg Research's report.
Adani Group's rout impacting India? 7 points you need to know
- The brutal selloff has also impacted India’s weighting in MSCI’s emerging-market benchmark, giving away its second spot to Taiwan after a rally in the latter’s market. As of the end of January, Taiwan’s weighting in the MSCI Emerging Markets Index rose to 14.2%, behind leader China’s 31.2%, while India’s fell to the third spot with 13%, according to Bloomberg-compiled data. India captured the second spot from Taiwan in August, however, the MSCI India Index has lost 4.2% this year, as per data by Bloomberg.
- Further, Adani group's dominance in India’s clean energy industries may lead to a slowdown in the pace of investment amid the country's ambitious plan to reduce emissions, as per experts. Hindenburg Research’s allegations about companies linked to Adani Group have raised doubt on the firm’s future, including its massive green energy investment, possibly creating problems for Adani Green, the group’s renewable energy arm. Adani Group has pledged $70 billion investment in green energy infrastructure.
- With the Indian government facing questions, a New York Times article stated that the debacle could damage confidence in the rest of the Indian stock market as at their peak, Adani shares accounted for more than 6% of India’s two main exchanges; today, the figure is barely 3%. “More troublingly, Adani’s fall could jeopardize the idea of India as the world’s next great hope as a driver of global economic growth," it said.
- India's top banker Uday Kotak doesn't see any systemic risk to the Indian financial system, amid recent dramatic stock falls in Adani Group companies. However, he believes that large Indian corporates rely more on global sources for debt and equity finance. “I do not see systemic risk to Indian financial system from recent events. However,large Indian corporates rely more on global sources for debt and equity finance. This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building," he said in a recent tweet.
- Though, the upheaval in the value of shares of the Gautam Adani group due to allegations by a US-based investment research firm will not have any impact on India's economy, Union Minister Gajendra Singh Shekhawat said on Sunday.
"I feel the share (value) of a private company would hardly have anything (impact) to do with the economy of the country. I think it is a normal process. The company's shares had witnessed ups and downs in the past," the Union Jal Shakti minister told reporters after being queried about developments connected to the billionaire businessman's conglomerate. - After stock exchanges put three Adani stocks on volatility watch as required by the rules, pushing margin money on their trades to the hilt, the Securities and Exchange Board of India (Sebi) issued a public reminder of its commitment to market integrity, saying that its financial markets remain stable and continue to function in a transparent and efficient manner.
- The sell-off in Adani Group stocks, where more than $110 billion in market value has already evaporated, continued on Monday as the US short-seller's report critical of the group's finances now led to credit warnings.
(With inputs from agencies)
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