The Indian stock market fell sharply after the US Department of Justice filed a $250 million bribery case against Indian tycoon Gautam Adani. After the complaint was filed on Wednesday (November 20), various shares of Adani Group fell by 5 to 20 percent. In particular, shares of Adani Enterprises, Adani Green Energy and Adani Power faced major declines.
In this incident, Adani Group lost market capitalization of 1 thousand 230 million dollars in one day. Experts see loss of confidence among international investors and legal risks as the main reasons for the decline. Adani Group's dollar bond also fell to a record 15 cents.
According to market watchers, the crisis could have a negative impact on Adani Group's global position. The company has yet to comment on the case. Investors are advised to be cautious at this time.
Allegations against Adani and their implications
US-based firm Hindenburg Research had accused the Adani Group of financial fraud in January. According to their report, the Adani Group has engaged in artificially inflated share prices and irregularities in financial transactions for many years. After that, India's regulatory agency Securities and Exchange Board of India (SEBI) started an investigation into the matter.
Adani Group's share price fell by up to 25 percent in a single day in the wake of lawsuits and complaints. Companies like Adani Enterprises, Adani Green Energy and Adani Transmission have been hit the hardest.
Investor concerns
The fall in Adani Group's share price has sparked renewed apprehension among local and global investors. This incident in the Indian market is affecting not only the Adani Group, but the entire stock market. Banks and financial institutions associated with the Adani Group have also increased risk.
Experts say such allegations could negatively impact Adani Group's brand and investor confidence in the long run. As a result, companies may also have trouble raising funds for their larger projects.
Market response
Adani Group's market value on the Mumbai Stock Exchange fell by around $10 billion in a shock due to the fall in prices. International credit rating agencies have already issued downgrade warnings for several of the group's companies.
However, Adani Group has earlier denied the allegations leveled against them and said that they are conducting business in compliance with all norms. A statement from the group said, 'There have been no irregularities in our financial transactions and corporate governance. We will prove our innocence through all legal processes.'
The overall picture
The impact of the case against Gautam Adani is not only immediate but also poses a long-term challenge to the Indian stock market. It is also an important issue for the overall financial sector stability of the country.
According to analysts, to deal with this situation, Adani Group needs to focus on transparency and take effective steps to restore investor confidence. On the other hand, it is an important test for market regulatory bodies in India. They should set a transparent and accountable precedent through an impartial investigation into the case.
The economic impact of this incident is not limited to Adani Group shares. It will also provide important guidance on India's corporate world and the global investment climate.
Source: BBC, DNA India, MSN News, Money Control
