Adani stocks surge after India probe finds no sign yet of share manipulation

Mumbai - Adani Group shares surged on Monday, extending gains spurred by an Indian court panel’s interim report that found no conclusive evidence of stock price manipulation

as alleged by US short-seller Hindenburg Research.

The 10 Adani stocks added about US$10 billion (S$13.5 billion) to their market value in Monday’s session, the biggest increase since Hindenburg’s scathing report in January.

Flagship Adani Enterprises surged almost 19 per cent, adding to its 3.5 per cent gain last Friday. Traders said trapped short positions were unwound aggressively, and investors were inclined to take new long bets on the group.

The interim report “is helping because the fear of further inquiries against the group will reduce”, said HDFC Securities head of retail research Deepak Jasani. “It’s given the group a clean chit of sorts. While the change in perception from foreign investors will be gradual, this is a pretty significant step.”

Adani Green Energy, Adani Transmission, Adani Total Gas, and Adani Power rose by their 5 per cent daily limit, while Adani Wilmar surged by its 10 per cent daily limit. Adani Ports and Special Economic Zone closed 6 per cent higher.

All 10 Adani Group stocks rose in Mumbai trading last Friday after the six-member panel’s report was made public, with Adani Enterprises and Adani Ports and Special Economic Zone recovering the day’s losses to close around 3.5 per cent up.

In a 173-page interim report released on Friday, the Supreme Court-appointed panel said that based on data from the Securities and Exchange Board of India (Sebi), it saw “no evident pattern of manipulation” in the steep stock price rise in billionaire Gautam Adani’s companies that can be attributed to “any single entity or group of connected entities”.

This refers to a central allegation of Hindenburg that offshore shell companies tied to the Adani family were bidding up the empire’s shares.

Prior to the Hindenburg attack, Adani Group companies were on a years-long runaway rally, buoying Mr Adani to the position of world’s second-richest man last September. The group has denied all of Hindenburg’s allegations.

The initial findings of the panel – which was set up on March 2 – come as a relief for the Adani empire as well as Sebi.

Yet it may renew concerns among foreign investors that Indian institutions are not holding the country’s most powerful conglomerates to global standards of corporate governance.

Investigations are ongoing. Sebi has an Aug 14 deadline from the Supreme Court to close its probe on any securities law violation by the Adani Group, as well as any unusual market activity in its stocks.

The regulator is still investigating the ownership of 13 overseas entities since October 2020 that hold Adani companies’ shares, said the panel, owing to their “opaque” structures where the ultimate chain of ownership is unclear.

Sebi is also looking into the rout that wiped more than US$100 billion off the conglomerate’s market value – specifically “suspicious trading” by six entities because of their “build-up of short positions” in Adani stocks before Hindenburg’s report.

The panel’s interim findings will add momentum to the Adani Group’s comeback strategy, which includes a US$2.6 billion fund-raising plan announced by two of its companies earlier in May. The proposal to issue shares is its first since the crisis disrupted a breakneck pace of growth.

The tycoon and his companies have also been pre-paying some debt, buying back some bonds, holding investor roadshows and selling stakes to investors like Mr Rajiv Jain’s GQG Partners. BLOOMBERG