(Bloomberg) — Adani Group shares rallied, extending gains spurred by an Indian court panel’s report that found no conclusive evidence of stock-price manipulation as alleged by US short seller Hindenburg Research.
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The 10 Adani stocks added about $10 billion to their market value in Monday’s session, the biggest increase since Hindenburg’s scathing report in January. Flagship Adani Enterprises Ltd. surged about 19%, adding to its gain on Friday, and closing at the highest level since Jan. 31. Traders said that trapped short positions were unwound aggressively, and investors were inclined to take new long bets on the group.
The sentiment toward the conglomerate has changed markedly from a week ago, when worries over the exclusion of some Adani stocks from MSCI Inc. indexes spurred a selloff. Stocks also suffered due to equity dilution concerns triggered by fundraising plans for Adani Enterprises and Adani Transmission Ltd.
The interim report “is helping because the fear of further inquiries against the group will reduce,” said Deepak Jasani, head of retail research at HDFC Securities Ltd. “It’s given the group a clean chit of sorts. While the change in perception from foreign investors will be gradual, this is a pretty significant step.”
In its 173-page report, the committee said that based on the data from the markets regulator Securities and Exchange Board of India, or SEBI, it saw “no evident pattern of manipulation” in the steep stock-price rise in billionaire Gautam Adani’s companies that can be attributed to “any single entity or group of connected entities.”
This referred to a central allegation of Hindenburg — the US short seller that claimed wide-ranging corporate malfeasance by the Adani Group in a Jan. 24 report — that offshore shell companies tied to Adani family were bidding up the empire’s shares.
That said, investigations are still ongoing. SEBI itself has an Aug. 14 deadline from the Supreme Court to close its probe on any securities law violation by the Adani Group, as well as any unusual market activity in its stocks.
Investors will also watch for the decision taken on fundraising at Adani Green Energy Ltd.’s board meeting on May 24. Meanwhile, the changes to MSCI indexes will take effect at the close of trading on May 31.
Adani Green Energy Ltd., Adani Transmission, Adani Total Gas Ltd., and Adani Power Ltd. rose by their 5% limit while Adani Wilmar Ltd. surged 10%. Adani Ports and Special Economic Zone Ltd. jumped as much as 9.5%.
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