Shares in India's Adani Group plunged up to 20 per cent on Friday and the company said it was considering legal action against U.S.-based short-selling firm Hindenburg Research for allegations of stock market manipulation and accounting fraud that have led investors to dump its stocks.
Shares in India's Adani Group plunged up to 20% on Friday and the company said it was considering legal action against U.S.-based short-selling firm Hindenburg Research for allegations of stock market manipulation and accounting fraud that have led investors to dump its stocks.
Gautam Adani and his family have built a vast fortune mining coal to fuel energy-hungry India's fast-growing economy. Businesses in the conglomerate span industries including construction, data transmission, media, renewable energy, defence manufacturing and agriculture. Investors began unloading shares after Hindenburg Research issued a report that said it was betting against shares in companies in the Adani empire. Hindenburg said it judged the seven key Adani listed companies to have an "85% downside, purely on a fundamental basis owing to sky-high valuations."
"In the event there is a sharp fall in the stocks then the financial institutions themselves could be at risk," he said. After heavy selling on Wednesday, India's markets were closed Thursday for a holiday. The bloodletting resumed in earnest on Friday, with shares in the flagship company Adani Enterprises falling 18.3%. Its shares fell 1.6% on Wednesday.Shares in Adani Transmission plunged 20% on Friday after sinking 8.1% on Wednesday. Adani Green and Adani Total Gas also fell 20%. Adani Ports and Special Economic Zone Ltd. sank 15.2%.
"Clearly, the report and its unsubstantiated contents were designed to have a deleterious effect on the share values of Adani Group companies as Hindenburg Research by their own admission, is positioned to benefit from a slide in Adani shares," Jalundhwala said.
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