Promoters hardest hit in meltdown

Mumbai: Of over Rs 10-lakh-cr rout that the Adani Group companies suffered in the stock meltdown, the promoters took the hardest hit as retail investors accounted for a smaller portion of the diversified conglomerate’s shares.

The ongoing bloodbath in Adani Group shares began soon after US-based short seller Hindeburg Research came out with a report on January 25, alleging fraud and stock manipulation by the promoters. Since then, the market capitalisation of Adani Group companies fell by more than 50 per cent.

Understandably, the promoters suffered the highest notional loss as the presence of retail investors is limited in the group companies. For instance, in Adani Enterprises which is the flagship of the group, promoters own 72 per cent stake while 6 per cent is with retail investors. The rest is with foreign institution investors (FIIs) and domestic institutional investors (DIIs).

However, experts say things are getting back on track. Talking to Bizz Buzz, Arun Kejriwal, a noted market expert and founder of KRIS, says, “The exchanges took measures to curtail volatility and introduced higher margins on the stocks. Further the price volatility seems to be subsiding and things are getting back on track.”

Meanwhile, MSCI has reviewed the stocks in its indices in its quarterly review and decided to keep the Adani pack as it is. Market regulator Sebi has discussed the issue of the markets and Adani group and ruled out any adverse impact. RBI reviewed the Adani group exposure and believes there is no overleverage in any company. Moreover, the government has discussed the issue in Parliament and made it clear that the group is a business house like any other and dismissed the need to debate it further.

The group got its act together and announcedresults for the entire group listed entities and most of the group companies posted encouraging quarterly financial results.

Further, with collapse of Adani Group stocks, some said Indian stock markets would also suffer. But that did not happen. Indian equities as a whole enjoyed a calm week in Mumbai, the country’s financial hub, and have held largely steady since the Adani collapse. The fact is that the country’s main market index is nearly 2.5 per cent above where it stood a year ago, even as US stocks fell by more than 4 per cent during the same period. India is now home to about 15 lakh companies and a well-capitalized stock market:

The exchanges took measures to curtail volatility and introduced higher margins on the stocks. Further the price volatility seems to be subsiding and things are getting back on track

- Arun Kejriwal, founder, KRIS