On 10th August 2024, Saturday, the Hindenburg Research published a so-called explosive report on the Security and Exchange Board of India (SEBI) chairman Madhabi Puri Buch and Indian conglomerate Adani Group. The report made an allegation that the SEBI chairman’s involvement in offshore funds and money siphoning. This report neither did generate the kind of discussion nor have the same reactions from the stock market the way a similar report in January 2023 had on the Indian stock market and Adani Group stocks!
This time, the Adani Group as whole has lost its market capitalization by just about 1% than the market capitalization before the said report, released on 10th August 2024! However, a similar report by Hindenburg Research in January 2023 wiped out the value of some Adani Group companies by 83%. Adani Total Power lost about 83% of market capitalization post revelations in January 2024. The whole Adani group had come under huge pressure. The whole group lost about $150 billion in valuation. Many financial institutions raised concerns about the future of Adani Group. It also had to cancel its FPO. Gautam Adani, the group chairman of the India conglomerate lost its position from the list of top ten richest people in the world!
Why? Has the short seller Hindenburg lost credibility at least in the Indian security market? A short answer to this question is perhaps, yes!
Adani Group, post fiasco, recovered most of the valuation loss in just a few months in 2024. Not only had this but the group has almost come out clean from a SEBI investigation (as SEBI seems to be of view that Adani Group has not done anything wrong and delaying investigation) and court litigation also in the highest court of India, the Supreme Court of India. The Supreme Court declined to form neither Special Investigation Team (SIT) nor to hand over the case to Central Bureau of Investigation (CBI)! Apart from this fact, the market has started thinking and believing that the Hindenburg Research is another short seller on the block and its reports are focused on its trades rather than any other aspects! So for the market, the allegations on SEBI chief hadn't much relevance!
Also the revelation was not new about the Adani Group. Along with this, the timing of this report was also very peculiar. This report came on Saturday. Saturday and Sunday is a trade holiday in India. This gave enough time to the market to come out of negative sentiments and realize that the report didn’t have much meaning for them!
Though, there remain some unanswered questions. Why did Hindenburg Research choose to attack an Indian regulator rather than a company? Why did it choose this particular time (Bangladesh is under turmoil and many India wants to repeat the same) to come up with a report on SEBI chairman, indirectly questioning the transparency of the security market regulator? Is it a coordinated attack on the Indian economy?
These questions must be answered while the intelligence agencies investigate the allegations on the chairman of SEBI. The position of chairman of SEBI is very responsible and capable of compromising the interest of Indian security markets, adversely affecting the Indian economy directly!
It should also be noted that such economic and corporate attacks on India are going to become normal and regular as India aspires to become a $50 trillion economy by 2047. But the most important question is whether India is ready to handle such pressures and put the right infrastructure to deal with such attacks through proper intelligence and perhaps espionage. India must be proactive and put in infrastructure if it does not have it before it is late as we are not in the 20th century and 21st century business would not be that easy and free ride for India the way it was in till now!
Rajeev K Upadhyay
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