Stock Markets in free fall: Find out why the Sensex is down 1000 points
Shares prices of all listed Adani Group companies came under new pressure on Friday with the group's market capitalisation decreasing by about Rs. 2 lakh crore early on
As a result of a short-seller attack on the Adani Group and other financial institutions, stocks dropped more than 1 per cent on Friday, reaching their lowest level in three months.
Since the start of the week's trading session on Wednesday, both indices have fallen by about 1.7%, with the majority of the losses attributable to a study published by U.S. short-seller Hindenburg Research that raised red flags about the Adani Group's debt levels and its use of tax havens.
Shares prices of all nine Adani Group companies that are publicly traded came under new pressure on Friday with the group's market capitalisation decreasing by about Rs. 2 lakh crore in early trading hours on Friday. This brought the cumulative fall since Tuesday's closing to more than Rs 2.75 lakh crore. Due to Republic Day, markets were closed on Thursday and opened today.
That derivatives are "weapons of mass devastation" in the financial markets, as Deven Choksey has put it, is "alarming" and "proves" the statement. He claimed that the stock market's treatment of Adani Group had triggered a crisis of trust among investors.
The Nifty 50's worst performers on Friday were Adani Ports and Adani Enterprises, both of which are related to the latter's upcoming $2.45 billion follow-on public offering (FPO).
Despite brokerages' claims that banks' exposure to the Adani Group was within reasonable bounds, the heavyweight financials sector again led the slump, tumbling by more than 2 per cent.
As other Asian markets reached a near nine-month high on the back of positive U.S. economic growth figures, Indian stocks fell.
Stocks in the auto industry were one of the few sectors to post gains, increasing by more than 2 per cent.
After posting its first quarterly profit in two years, index heavyweight Tata Motors jumped 8 percent on the back of strong demand and the success of its Jaguar Land Rover (JLR) premium car division.
Adani Group's Group Head - Legal Jatin Jalundhwala had on Thursday claimed that the "unresearched study" issued by Hindenburg Research "has severely harmed the Adani Group, their shareholders and investors" and called the paper "maliciously nasty."
"The report's effects on financial markets in India have been extremely worrying and have caused unwarranted distress among ordinary Indians. This deliberate and careless attempt by a foreign company to deceive investors and the public, damage the reputation of the Adani Group and its leaders and derail Adani Enterprises' FPO has greatly concerned us. We are currently reviewing the applicable sections of US and Indian regulations to see what, if any, corrective and punitive measures can be taken against Hindenburg Research," he said in a public statement.
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