Industrialist Gautam Adani, who was the second richest person in the world when the year began, has seen his wealth significantly decline and has slipped to position 21 in the Bloomberg Billionaires index due to the severe selloff in his Group stocks, which has erased about half of the conglomerate's value in just a week and was sparked by the report from the US-based short-seller Hindenburg Research.
India's weighting in MSCI's emerging-market benchmark has also been negatively influenced by the harsh selloff, losing its second place to Taiwan following a rebound in that country's market.
According to figures published by Bloomberg, Taiwan's weighting in the MSCI Emerging Markets Index increased to 14.2% at the end of January, trailing only leader China's 31.2%, while India dropped to third place with 13%. In August, India replaced Taiwan as the second-place nation, but according to data from Bloomberg, the MSCI India Index has fallen 4.2% since then.
The dominance of the Adani group in India's renewable energy sectors may also slow down investment despite the nation's aggressive ambition to reduce emissions, according to analysts. The charges made by Hindenburg Research against entities connected to the Adani Group cast doubt on the firm's future, especially its significant investment in green energy, potentially posing issues for the group's renewable energy business, Adani Green. The Adani Group has promised to invest $70 billion in infrastructure for renewable energy.
The catastrophe might undermine investor trust in the rest of the Indian stock market, according to a New York Times report. At their peak, Adani shares represented more than 6% of India's two main exchanges; today, the percentage is only 3%. In spite of recent sharp stock declines in Adani Group companies, India's top banker Uday Kotak does not perceive any systemic risk to the Indian financial system. However, he thinks that for debt and equity financing, significant Indian corporations rely more on outside sources. "I do not believe that recent events pose a systemic risk to the Indian financial system. Large Indian corporations, however, rely heavily on international sources of debt and equity financing. Challenges and weaknesses result from this. In a recent tweet, he stated that it was time to further boost Indian underwriting and capacity building.
Nevertheless, according to Union Minister Gajendra Singh Shekhawat, the change in the value of the Gautam Adani group's stock as a result of claims made by a US-based investment research firm will not have any bearing on India's economy.
The Securities and Exchange Board of India (Sebi) issued a public reminder of its commitment to market integrity after stock exchanges placed three Adani stocks on volatility watch as required by the rules, pushing margin money on their trades to the limit. It said that its financial markets remain stable and continue to operate in a transparent and efficient manner.
In India's seven listed Adani Group companies, where more than $110 billion in market value has already vanished, the sell-off resumed on Monday as credit warnings followed the US short-sellers' report that was critical of the group's finances.
Adani Ports Enters F&O Ban List for trade on NSE today
Adani FPO withdrawal has no impact on India's macroeconomic fundamentals: FM
Here’s what Adani M-Cap changed since Hindenburg report