Adani stocks rally up to 20%, add $15 bn to MCap after SC reserves probe into Hindenburg charges

Adani Group market value surged by over $15 billion with group stocks rallying up to 20 percent on November 28 after the Supreme Court reserved its order to probe the companies based on a US short-seller’s allegations of accounting fraud and stock manipulation.

Adani Total Gas led the pack with a 19.62 percent rally to the day’s high of Rs 642 on the National Stock Exchange (NSE). Around 50 lakh shares traded on the NSE and NSE combined, way above the one-week and one-month average volume of 5 lakh and 6 lakh shares. The company’s market capitalisation shot past Rs 67,000 crore on November 28.

Shares of Adani Energy Solutions, too, hit the intraday high with a 13 percent surge to Rs 824.50 on the NSE. The Adani Green Energy share price rallied nearly 8 percent to an intraday high of Rs 1,011.50. Adani Power share price also gained over 7 percent to a 52-week high of Rs 423.15.

Adani Wilmar shares zoomed 6 percent to hit an intraday high of Rs 338.50 on the NSE. Shares of the Gautam Adani-led conglomerate flagship Adani Enterprises climbed 6 percent to hit a day-high price of Rs 2,370. Adani Ports shares gained around 3 percent to Rs 826.00 on the NSE.

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Among other Adani Group listed firms, NDTV shares gained over 5 percent, Ambuja Cements over 3 percent and ACC over 2 percent.

“The mood among money managers has been to cut all shorts and go long, so I am not at all surprised by today’s move,” said Abhay Agarwal, fund manager at Piper Serica Advisors Pvt. The top court’s statement about the regulator’s probe was definitive but the stock rally today “seems more about short squeezing”.

The rally in the group stocks found a trigger in the apex court’s decision to  reserve its verdict, saying that couldn’t order a probe based only on certain reports and without hearing the entities impacted by its orders. “We don’t have to treat the Hindenburg report as being a statement of truth. There is no means of testing the veracity of the Hindenburg report and hence asked Sebi to probe,” the court said. Hindenburg is a US short-seller which had levelled the allegations against the Adani Group in January this year.

Also read | Adani-Hindenburg case: SC reserves judgment, CJI indicates at passing directions to Sebi 

An SC bench, comprising justices JB Pardiwala, Manoj Misra and others, said that it cannot expect a statutory regulator like Sebi to start issuing show-cause notices on the basis of reports published by Hindenburg or by a news organisation.

“Some investors could have read the court arguments as the regulator has not found any substance out of the allegations, and this could have led to the stocks rally,” said Deven Choksey, a strategist with DRChoksey Finserv.

It will not be proper for the highest court to appoint a special investigation team (SIT) to look into alleged violations of minimum public shareholding (MPS) norms by Adani group companies without there being evidence of lapses on the part of Sebi, which is investigating the matter, the Supreme Court observed on November 24.

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