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Adani group stocks crash up to 30%; what’s fueling the selloff? – Economic Times

NEW DELHI: Even after the Rs 20,000 crore follow-on public offer (FPO) of Adani Enterprises sailed through on Tuesday, shares of the Gautam Adani’s flagship entity crashed up to 30% on Wednesday amid report that Credit Suisse has stopped accepting bonds of Adani companies as collateral for margin loans.

All 10 stocks belonging to billionaire Gautam Adani’s vast empire ended in the red zone.

crashed up to 30% before ending 28.5% lower at Rs 2,128.7 on BSE. While crashed 20%, ended 10% lower. ended lower by 16.6% and 6%.

Three other group companies – Adani Power, Adani Wilmar and NDTV – also hit their respective 5% lower circuits today.

Today’s sell-off was triggered by a report saying that Credit Suisse has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy and Adani Electricity Mumbai.

Adani stocks have been in a freefall ever since American short-seller Hindenburg Enterprises brought out a report against the ports-to-power conglomerate owned by billionaire Gautam Adani.

In the last five trading sessions, the total market cap erosion in Adani stocks has now extended to one-third of its value. Today’s loss alone was worth around Rs 2 lakh crore.

In the meantime, PSU bank stocks too were affected in the collateral damage. Nifty PSU Bank index ended 5.7% lower with Bank of Baroda, Canara Bank and PNB losing up to 8%. SBI, which has already said that its exposure to Adani companies was well below the RBI’s limit, ended 4.8% lower at Rs 527.With strong support from non-institutional investors and qualified institutional buyers (QIB), Adani Enterprises’ FPO had sailed through yesterday with 112% subscription. Retail investors, however, stayed away from the FPO.

Ever since Hindenburg released a report making several allegations against the Adani Group, the two sides have been engaged in a war of words.

In a 413-page strong rebuttal to the 88 questions asked by the New York-based short-seller, the Adani Group has raised questions on the motivation behind the report and said it is case of unethical short selling by a foreign entity by publishing a report to manipulate and depress the price of stock, and create a false market.

This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India, Adani had said.

What should traders do with Adani Enterprises and Adani Ports?
Technically, both the stocks have closed below their 50 & 100-EMAs on the daily as well as the weekly chart, indicating a strong bearish scenario. Both the stocks are also trading below their major trend line resistance levels.

Rohan Patil, Technical Analyst, SAMCO Securities, said for Adani Enterprises, the maximum open interest (OI) build-up was seen at 2,200 Put and 3,000 Call Options. For Adani Ports, maximum OI build-up was at 450 Put and 700 & followed by 600 Call options. The Open Interest for the Adani Enterprises has increased by 8.1% and for the Adani Ports it has increased by 5.08%

The overall option data suggests a broad trading range is likely to be witnessed in these stocks from the Adani group with high volatility on the cards, he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)