According to the findings of Sebi’s investigation into the Adani vs Hindenburg saga, some entities profited from the massive drop in the stocks of billionaire Gautam Adani’s companies.
“SEBI has also discovered that some entities took short positions prior to the publication of the Hindenburg report and profited from squaring off their positions after the price crashed upon publication of the report,” a Supreme Court-appointed panel said in a report released on Friday.
The committee stated that it cannot express an opinion on the merits of the case because it is still being investigated.
The report stated: “Suffice it to say, it wouldn’t be possible to return to the conclusion of regulatory failure on this count since SEBI has an active and functioning surveillance structure to take notice of high price and volume shifts and has analyzed itself to the data generated by such surveillance, applying objective criteria, to consider whether the integrity of the natural price discovery process has been manipulated.”
The market capitalization of Adani stocks experienced a significant value erosion between January 24 and February 27—roughly Rs 12.4 lakh crore. By March 9, this had dropped even further to Rs 10 lakh crore.
The panel estimated that retail investors in Adani stocks lost around Rs 3,700 crore, based on data from Sebi. When other individuals’ losses, including those of HNIs, are factored in, the total loss rises to Rs 22,000 crore.
Sebi’s calculation was performed by excluding the significant number of shares purchased by individuals following the publication of the Hindenburg report and adjusting for net selling by individuals exceeding their holdings on January 24, following the publication of the Hindenburg report.
Following the end of the panic selling, the market repriced and reassessed Adani stocks. “While they may not have returned to pre-January 24, 2023 levels, they are stable at the newly re-priced level,” the committee, chaired by retired judge Justice AM Sapre, stated.
Based on the evidence and data available thus far, the panel has stated that it cannot conclude whether Sebi committed a regulatory failure.
Sebi has been given until August 14 to complete its investigation by the Supreme Court. The six-member apex court panel, which included Infosys co-founder Nandan Nilekani and banking veteran K V Kamath, consulted with Zerodha co-founder Nithin Kamath, AMFI and JM Financial founder Nimesh Kampani.
Following the release of the 178-page report, Adani stocks rose by up to 4%, with Adani Transmission and Adani Power leading the way. Adani Total Gas was the only stock in the red zone out of a group of ten.
