Markets, Trust, and Scrutiny

Hindenburg’s claims against Adani, later dismissed by SEBI, prove perception often outpaces fact—hurting India’s credibility and underscoring the need for quicker regulatory response

- SHISHIR PRIYADARSHI

The Securities and Exchange Board of India (SEBI) has finally delivered its judgment in the much-debated case stemming from the explosive allegations made by Hindenburg Research against the Adani Group. 'The investigation found no regulatory breach, fraud, or investor harm regarding the routing of group loans through “conduits,” as was alleged.

Allloans were repaid with interest; there was no diversion of funds, and no evidence of market manipulation or investor harm was found. In short, SEBI did not find any basis or substance in any of the allegations that had been levelled.

Yet, even as the dust begins to settle, one cannot help but ask: what was the cost that the country had to bear due to this protracted storm? If no regulatory breach occurred, then what does this episode tell us about the vulnerability of India’s corporate sector to allegations—whether founded or unfounded—that can shake markets, derail investment flows, and stain the carefully cultivated narrative of “India Rising”? The answer goes far beyond the fortunes of one business conglomerate. It goes to the heart of the investment climate in India and the fine balance between ensuring transparency and preventing unchecked trial by innuendo.

The Fragility of Reputation in Capital Markets

Global capital markets operate on perception as much as fact. Allegations, even before they are proven or disproven, can trigger a selloff. The Hindenburg report exemplified this. Released at the peak of Indias drive to project itself as an investment-friendly nation, it wiped out billions of dollars in market capitalisation in days. Foreign investors, sensitive to perceptions of governance lapses and wary of opaque financial practices, adopted a “wait and watch” stance.