‘Wait for the dust to settle before…’: JM Financial’s Akshay Bhagwat on Adani Group shares fall

Shares of the Adani Group took a heavy beating in trading on Thursday, with the flagship — Adani Enterprises — falling as much as 23%. Akshay Bhagwat, Senior Vice President, Derivatives Research at JM Financial Services, in an exclusive interaction with Business todaysaid: “This is the second time (after Hindenburg Research) that Adani shares have received a jolt in the market due to serious allegations against the group. Looking at the price action, one thing is clear that this is not well received. by short-term traders, in the futures and options (F&O) space, there are several downsides for the Adani Ports and Adani Enterprises segment.”

As for the current scenario, wait for the dust to settle before putting fresh funds into these stocks, he advised market participants. “From a short-term perspective, there could be more pain ahead. However, one can stay invested, but only with a long-term view given the past recovery seen in these counters,” Bhagwat added.

Today’s steep fall in Adani shares came after Adani Group chairman Gautam Adani was indicted in the US on bribery and fraud charges. U.S. authorities said Adani and seven other defendants, including his nephew Sagar Adani, agreed to pay bribes to Indian government officials to secure contracts expected to generate $2 billion in profits over 20 years and to develop India’s largest solar power plant project. A judge has issued arrest warrants for Gautam Adani and Sagar Adani, and prosecutors plan to turn those warrants over to foreign law enforcement, according to U.S. court filings.

Prosecutors also said Adanis and another Adani Green Energy executive, former CEO Vneet Jaain, raised more than $3 billion in loans and bonds while hiding their corruption from lenders and investors. Gautam Adani, Sagar Adani and Jaain were charged with securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud, and the Adanis were also charged in a Securities and Exchange Commission civil case from the USA.

In response, Adani Green said in a BSE filing: “The United States Department of Justice and the United States Securities and Exchange Commission issued a criminal indictment and filed a civil complaint in the United States District Court, respectively United States for the Eastern District of the United States. New York, against our board members, Gautam Adani and Sagar Adani, the United States Department of Justice also included our board member, Vneet Jaain, in this criminal indictment subsidiaries have currently decided not to proceed with the proposed USD bond offerings. “

The new allegations follow much turmoil for the Adani Group in January last year, when US short seller Hindenburg Research accused it of improperly using offshore tax havens – an allegation the Indian conglomerate has denied.