New Delhi: After 6 days of market decline, some shares of Adani Group gained ground on Friday after French energy major TotalEnergies turned positive on the firm.
However, the rebound was not enough to compensate for the heavy losses he had suffered. Adani Group’s losses have now increased to around $120 billion.
Finance Minister Nirmala Sitharaman’s statement on India’s strong banking system also instilled confidence among investors about their risk exposure to the group. Later, RBI also reiterated Sitharaman’s statement and said that India’s banking sector is resilient and stable.
Here are the top developments in the Adani-Hindenburg row:
Government reviews Adani’s financials
However, the rebound was not enough to compensate for the heavy losses he had suffered. Adani Group’s losses have now increased to around $120 billion.
Finance Minister Nirmala Sitharaman’s statement on India’s strong banking system also instilled confidence among investors about their risk exposure to the group. Later, RBI also reiterated Sitharaman’s statement and said that India’s banking sector is resilient and stable.
Here are the top developments in the Adani-Hindenburg row:
Government reviews Adani’s financials
- Reuters quoted sources as saying that the corporate affairs ministry has begun a preliminary review of Adani Group’s financial statements and other regulatory submissions over the past few years.
- The ministry’s review is the latest probe into the Adani group, but the first by the government.
- The process was launched on Thursday, one of the government sources told Reuters, under “Section 206” of India’s Companies Act, under which the government reviews financial documents accumulated over the years, such as balance sheets. sheets, books of accounts or ledgers.
Nirmala Sitharaman on the Adani-Hindenburg row
- Finance Minister Nirmala Sitharaman said she did not expect the ongoing controversy around the Adani Group to affect investor confidence as India’s banking system is strong and financial markets are “well regulated”.
- Sitharaman said that State Bank of India (SBI) and Life Insurance Corporation of India (LIC) have already clarified that they are not exposed to Adani Group shares.
- He also highlighted that India remains “a fully governed” country and a “very well regulated financial market”. “One instance, though much talked about globally, I think will not be an indication of how well Indian financial markets are regulated,” Sitharaman said.
Gautam Adani’s ranking falls further
- Industrialist Gautam Adani slipped to the 22nd spot on the Forbes real-time billionaires list during the day. However, at the close of the market, his ranking improved marginally to 17th.
- Adani has already lost his tag as the richest Indian person.
- Currently, Adani’s total assets are $61.7 billion.
Banking sector resilient, says RBI
- Amid concerns over banks’ exposure to the crisis-hit Adani group, the Reserve Bank said India’s banking sector is resilient and stable, and the central bank continues to monitor lenders.
- In response to media reports expressing concern about the exposure of Indian banks to a “business conglomerate”, the Reserve Bank said in a statement that it is continuously monitoring the banking sector.
Finance Secretary says nothing to worry
- Finance secretary TV Somanathan said there is no reason to worry for depositors, policy holders in Adani group companies or those investing in any nationalized bank or insurance company.
- Somanathan told a TV channel on Friday that the investment of State Bank of India and Life Insurance Corporation in any company is well below the level where it should be a matter of concern for investors.
SBI says Adani Group has 0.88% exposure
- India’s largest lender State Bank of India (SBI) said the total exposure to the Adani group is 0.88% of the book or about Rs 27,000 crore.
- SBI said it does not envisage any setback to its bets.
- Its chief said that SBI has not given any loan to the port-to-mining group in lieu of shares.
- SBI chairman Dinesh Khara clarified that the non-fund exposure is limited to letters of credit and performance bank guarantees, and is not related to equity raising or acquisition activities of the Gautam Adani-led group.
Adani Enterprises dropped from Dow Jones
- S&P Dow Jones has said it will remove Adani Group’s flagship firm Adani Enterprises from its sustainability index with effect from February 7 following media and stakeholder analysis following allegations of accounting fraud.
- Leading stock exchanges BSE and NSE have placed three Adani group companies – Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements – under their short-term Additional Monitoring Measures (ASM) framework.
Four stocks of Adani Group rose
- Shares of four Adani group firms, including Adani Enterprises and Adani Ports, rallied on Friday after facing heavy losses in the last 6 days.
- The stock of Adani Enterprises closed at Rs 1,584.20, down 1.25% on the BSE. During the day, it fell 35% to Rs 1,017.10 – a one-year low.
- Shares of Adani Ports also jumped and climbed 7.98% to Rs 498.85 after falling 14.51% to Rs 394.95 during the day.
- Some shares of Adani Group gained after a confident statement from French energy company TotalEnergies, which lifted the market trend
What did Fitch say to Moody’s on the fall in Adani’s shares?
- Credit rating agency Moody’s has warned that the recent selloff in Adani Group’s shares could reduce the group’s ability to raise capital.
- While its partner Fitch saw no immediate impact on its rating.
- “These adverse events are likely to reduce the group’s ability to raise capital to meet committed capex or refinance refinanced debt over the next 1-2 years,” Moody’s said.
- Fitch said there were no significant offshore bonds maturing in the near term, thereby reducing refinancing risk and near-term liquidity risk.
S&P has reduced the outlook to negative
- Rating agency S&P Global has affirmed the ratings and revised outlook on Adani Ports and Adani Electricity from stable to negative.
- “There is a risk that investors are concerned about the group’s governance and disclosures are larger than what is currently included in our ratings, or that new scrutiny and negative market sentiment could lead to an increase in the cost of capital and increased availability of funds for rated entities.” Access may be reduced,” S&P said in a statement.
(with inputs from agencies)