Adani market meltdown baffles India

Gautam Adani's businesses have lost $108 billion in a week, one of the biggest wipeouts in India's history, after an explosive report by short-seller Hindenburg Research forced him to pull a stock sale at the 11th hour and led some lenders to reject his securities as collateral for client trades, reports Bloomberg.

After drawing money from the Middle East and other Indian billionaires to shore up a $2.4 billion share sale, Adani Enterprises cancelled it abruptly on Wednesday, citing "market volatility."

Cancelling the share sale saw Adani stocks plunge, opposition lawmakers call for a wider probe and the central bank spring into action to check on banks' exposure.

The share sale was seen as a crucial test of investor confidence in Adani, whose net worth had shot up about 2,000% in recent years as share prices for his listed companies soared.

Adani, who last year became the world's second-richest man with a $147 billion fortune, has seen his own personal wealth plummet by around $57 billion since Hindenburg accused his companies of fraud to inflate revenue and stock prices.

The Indian business tycoon made a vast fortune mining coal as energy-hungry India grew swiftly after its economy was liberalised in the 1990s. Adani companies operate airports in major cities, build roads, generate electricity, manufacture defence equipment, develop agricultural drones, sell cooking oil and run a media outlet.

According to Bloomberg, the tumult has become a national issue with lawmakers disrupting parliament to demand answers from Prime Minister Narendra Modi's government, given how closely Adani's interests from ports to energy are intertwined with the nation's growth plans.

Adani's plummeting stocks have raised concerns about the likelihood of a wider impact on India's financial system.

The central bank has asked local banks for details of their exposure to the Adani Group, government and banking sources told Reuters on Thursday.

Indian regulator looking into Adani share wipeout

India's market regulator is examining a rout in the shares of billionaire Gautam Adani's companies, a source with direct knowledge told Reuters.

The Securities and Exchange Board of India (SEBI) is also looking into several of the allegations made by Hindenburg Research, and into any potential irregularities in a key share sale by the flagship Adani Enterprises, the source said, speaking on condition of anonymity.

Spokespeople for SEBI and Adani Group did not immediately respond to requests for comment.

Among several allegations, Hindenburg accused Adani Group last week of using offshore tax havens and stock manipulation. It also raised concerns about high debt and the valuations of the seven listed Adani companies.

The group has denied the allegations, saying the short-seller's narrative of stock manipulation has "no basis" and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.

India cenbank asks for details 

India's central bank has asked local banks for details of their exposure to the Adani group of companies, government and banking sources told Reuters.

The Reserve Bank of India did not immediately respond to a request for comment. The sources were speaking to Reuters and declined to be named because they were not authorised to speak to the media.

Shares in Adani group of companies plunged on Thursday after the tycoon Gautam Adani-led conglomerate shelved a $2.5 billion share sale amid a turbulent market, citing the need to insulate investors from potential losses.

Opposition seeks probe

Both Houses of the Indian Parliament were adjourned till 2pm on Thursday amid disruptions over the Opposition's demand for debate on public sector investments in "companies losing market value", an apparent reference to Adani Group.

Congress president and leader of Opposition in Rajya Sabha Mallikarjun Kharge had sent a formal letter to the chairman of upper house asking for suspension of regular business to "discuss the issue of investment by LIC, public sector banks and financial institutions in companies losing market value endangering the hard-earned savings of crores of Indians."

Kharge said the Congress and other opposition parties want a Joint Parliamentary Committee or Supreme Court-monitored probe into the investments by public sector companies amid the ongoing market crisis triggered by the Adani stock rout.

"Either a Joint Parliamentary Committee or a team under the supervision of the CJI of the Supreme Court should investigate this," Kharge told reporters.

Jairam Ramesh, Congress general secretary in charge of communications, tweeted, "Both Houses of Parliament adjourned today till 2pm because Govt did not agree to combined Opposition demand for an investigation into forced investments by LIC, SBI & other public institutions that have lost huge value in recent days endangering savings of crores of Indians."

Adani says they will review market strategy

In a recorded video address to investors released on Thursday, Adani said, "Once the market stabilises, we will review our capital market strategy."

"This decision will not have any impact on our existing operations and future plans. We will continue to focus on timely execution and delivery of projects."

"The fundamentals of our company are strong," Adani said in the video, his first public comments on the crisis.

"Our balance sheet is healthy and assets, robust. Our EBITDA levels and cash flows have been very strong and we have an impeccable track record of fulfilling our debt obligations. We will continue to focus on long term value creation and growth will be managed by internal accruals."