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ADANI AGAIN ! ..Why the rules of the game appear to be changing ? Part I


The Hindenburg report of January 2023 was also a political-business Molotov cocktail of sorts in the heated political context. But by May 2024, Money Control reported " Six Adani group stocks, including Adani Enterprises Ltd, Adani Green Energy Ltd and Adani Ports & SEZ, have erased the losses triggered by a critical Hindenburg report and are now trading above their January 2023 levels".


So, was the Hindenburg report of January 2023 a game changer ? Who really gained from the situation created by the report ? Were there any long-term implications for the Adani Group ? What is the implication for Indian and Foreign investors. Lastly, is the latest response by Hindenburg after receiving the show-cause notice justified ? Does it have any implications for India?


The new government was elected in April 2024 but even before this, it was clear to the objective onlooker that a proxy war of sorts has been waged by some interested groups with Adani as a target to prove charges of crony-capitalism, whether or not justified. Now, it would appear that even SEBI (The Securities and Exchange Board of India) & the Supreme Court of India are in the firing line.


SEBI, India's market regulator, issued a "show-cause notice" to Hindenburg Research on June 27th, 2024. It is a formal document from a regulatory body like Sebi, outlining potential violations of regulations and asking the recipient to explain their actions. Essentially, SEBI has asked Hindenburg to justify their research report and short-selling activity related to the Adani Group.


Hindenburg has retaliated by accusing SEBI of collusion by not investigating its allegations of stock manipulations of the Adani group. It virtually accuses SEBI of complicity with Adani group by pressurizing brokers to support Adani scrips ! A Right to Information (RTI) application seeking details of SEBI's interactions with both Hindenburg and the Adani Group has also been filed. The short seller said that with the investigation, Indian investors have been given a "loud" message. "You have no real protection from fraud. Corporate governance in India is a myth for businessmen that can buy influence," it said. Provocative charges really ! All of us are aware that we live in an inter-connected world. But these proxy-wars are going to be the next frontier. It's interesting times indeed!

-To be continued

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