Just one word: Adani
Yesterday's Adani news broke the internet (and the stock market). What is all the hush and rush about?
Adani Group has been the talk of the town.
If the stock market has been shooting through the roof, the six Adani Group stocks have been shooting through the sky. So much so that Gautam Adani, the promoter of Adani Group, has become the second richest man in Asia.
The Group has always been in the spotlight for something or the other. Be it winning deals of airport operations, mining activities in Australia, its foray into cement and defense industries, or scaling up of solar power, you will find Adani everywhere.
But, success comes with a cost: the cost of always being in the limelight, always under scrutiny. And, if you have skeletons in your closet, you have all the more reason to be afraid…
Accusations are nothing new for the Adani Group. Their success is often attributed to their proximity to powerful political figures (you know who!). Their mining activities have been internationally condemned. Their name has also been dragged into India’s farmers' protest.
Yet, Adani Group has continued its spectacular expansion without worrying about the negative press.
But, for how long?
A cryptic tweet from Sucheta Dalal (who exposed the Harshad Mehta scam) got everyone talking. It has to be Adani, everyone said.
Maybe Adani Group would have brushed this under the carpet as well. But, in came another blow. NSDL froze accounts of certain Investment Funds because of non-compliance with a disclosure requirement as per the money laundering laws.
Foreign entities. Foreign funds. All related to Adani Group. Kinda fits with Sucheta Dalal’s tweets, no?
As people started digging, the whispers and murmurs took the form of a great fall in its stock prices. The group lost more than $6 billion, while Adani Enterprises witnessed its steepest fall in a decade.
But, wait. Let’s rewind to understand why this happened.
Here are all the foreign investment funds that hold stakes in Adani Group:
Investment funds usually diversify their investments, right?
But, most of these FIIs who are invested in Adani have over 90% of their total fund balance (Asset Under Management or AUM) in Adani stocks. Sensing Daal mai kuch Kaala?
Wait for it...
Three of the FIIs who were barred from buying and selling securities in the stock market have the same registered address in Port Louis.
Something doesn’t feel right. There seems to be a common master who is pulling the strings. This could be an elaborate setup.
Money laundering changes the nature of money from black to white. It involves the layering of transactions in such a manner that tracing the true source becomes a tedious job. Is the master doing something of that sort? With the facade of FII, is the master pumping the stocks?
But the master’s plan has been spoiled. Adani Group came up with a clarification that the news reports are erroneous. As of 14 June 2021, none of the FIIs’ accounts are frozen. They wrote to the Registrar and Transfer Agent (the Demat guys), who confirmed the same.
Maybe the accounts were frozen on 31st May. But, by 14 June, everything was as good as ever?
So, all this frenzy for nothing? Or, was this also a well-coordinated move? Maybe the master saw an opportunity to dump some stocks and book profits? What if the master led the slump in the stock prices?
Whether Adani stocks will continue to soar higher or be brought down by scared investors is anybody’s guess.
A SEBI probe is underway. We’ll wait for the verdict. Hope it’s not too late for retail investors, though.
Chalo, have a good day ahead and... read on.
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