Should you invest in Adani or stay away amidst the raging Hindenburg report?

Adani stocks are falling after Hindenburg's report. Will they continue to fall?

stocks are falling

January 27, 2023, saw Adani stocks hit their lower circuits, with some double-digit recording drops. It was overwhelming, and the FPO amounting Rs. 20,000 crores also faced issues amidst the selloff. Adani can thank a US firm for the selloff as it accused Adani of fraud and manipulation schemes. It has resulted in many sellers but no buyers for the Adani stocks. Adani Total Gas, Adani Green Energy, and Adani Transmission recorded 20% drops, hitting their lower circuits. Adani Wilmar and Adani Power hit their 5% lower circuit. Adani Ports fell by 16% on January 27. 

The flagship of Adani, Adani Enterprises, dropped by 20% and closed at Rs. 2,762.15 on the BSE after launching its FPO. The massive drops led to a steep fall in Gautam Adani's total worth. He holds the seventh position in the Bloomberg Billionaire Index. His net worth fell by $20.8 billion. This year, his wealth has dropped by $27.9 billion. The selloff resulted in bears taking over the market, with Nifty 50 and Sensex falling by over 2% each. 

Read: Should you buy Adani Wilmar? Here's what experts suggest!

Hindenburg Accusation

Hindenburg Research's accusation led to the massive falls. It said it investigated Adani for two years and found that the company has been involved in fraudulent practices for decades. The top management at Adani denied the accusations and called it maliciously mischievous. Adani's management also said the report's objective is to damage the Rs. 20,000 crore FPO. It is among the largest FPOs in India. Adani has provided a detailed clarification resulting from the report. 

Will Adani Selloff Continue?

As per financial experts, Adani's debt structure is burgeoning, and the valuations are expensive. Investors want to stay away from the stock. However, the latest report seems like the last straw. The FPO only got a 4,70,160 equity share bidding on the issue's first day against the offered 4,55,06,791 equity shares. The FPOs price band is between  Rs. 3,112 to Rs. 3,276 per FPO equity share. Adani does not plan to change its FPO despite lackluster demand and stated that it would continue the FPO according to its schedule and the offered price band. 

The effect of the report on the investors is unquestionable, and they will keenly monitor the advances resulting from it. Reports suggest that Adani is looking to sue the US-based firm. Financial experts suggest that trading entities, domestic institutions, and individual investors want to sell their shares. At the same time, foreign and domestic institutions and other promoters retain most of its entities. The selloff has already occurred, and it is unlikely that the institutional entities will sell now. 

Read: Top 10 points for the Adani FPO.

Experts suggest that the downside in the stocks might be limited, and the upside could potentially be massive. Various experts also suggest staying away from the stock till the situation becomes clearer. Reports suggest the lawsuit is in the offing, and it would be interesting to see where the stock goes. 

Where will the markets go after Hindenburg's accusations of Adani?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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