US short seller's fraud claim batters Adani Group shares

Hindenburg Research releases lengthy report alleging fraud by the conglomerate

Investors in Adani Group companies lost a whopping ₹85,000 crore in wealth after US activist investor Hindenburg Research released a lengthy report that alleged fraud by the Ahmedabad-based group.

As the news of the report spread on Twitter and WhatsApp groups and television channels, the shares of Adani Group firms began to plummet, leaving the group scrambling for damage control as it furiously denied the allegations as "baseless and discredited".

Market sentiments were downcast on Wednesday, but while the BSE 30-share index fell by 1.27%, the nine Adani group companies' market capitalization collectively lost by a wider 4.5%.

Later in a YouTube video, with the national tricolour in the background, the Adani Group's chief financial officer, Jugeshinder Singh, responded with his trademark aggressive mien: "We are shocked that Hindenburg Research has published a report on 24 January without making any attempt to contact us or verify the factual matrix," Singh said. "The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts," he riposted.

So far, Hindenburg's most prominent short attack was the one that targeted Nikola, in which it accused the electric-vehicle maker of "an ocean of lies." Nikola, which at one point had a $34 billion market value, is now worth $1.3 billion, and a US jury convicted founder Trevor Milton of defrauding investors in October.

Hindenburg first researches a target firm, betting its stock will fall, and then promotes its findings publicly through social media. The group positions itself as a watchdog safeguarding investors from corporate misconduct, while the targeted firms typically accuse it of manipulating the market.