- Friday, April 26, 2024
By: Shubham Ghosh
Both houses of the Indian parliament were adjourned on Friday (3) as chaos prevailed with some lawmakers demanding an inquiry after the shares in billionaire Gautam Adani’s group companies witnessed a meltdown. Many have feared that it could trigger a big financial turmoil.
While shares in Adani companies recovered after seeing sharp slump earlier in the day, seven listed firms still lost about half of their market value or over $100 billion (£83 billion) combined, since US short-seller Hindenburg Research accused the group of stock manipulation and unsustainable debt last week.
Adani Group, one of India’s top conglomerates, rejected the accusation and came up with strong rebuttals. But it has not arrested the slide in its shares.
Credit ratings agency Moody’s warned on Friday that the share plunge could hit the group’s ability to raise capital, although peer Fitch saw no immediate impact on its ratings, Reuters reported.
“These adverse developments are likely to reduce the group’s ability to raise capital to fund committed capex or refinance maturing debt over the next 1-2 years. We recognise that a portion of the capex is deferrable,” Moody’s said.
Fearing the turmoil could soon affect the broader financial system, some Indian politicians have called for a wider probe into the matter. It has also been reported that India’s central bank — the Reserve Bank of India — sought details of exposure to the group from local lenders.
Speakers of both houses of the parliament adjourned proceedings during the day as some lawmakers shouted slogans such as: “We want a joint parliamentary committee (to investigate)” and “Stop looting the poor!
When asked about recent stock market weakness, India’s finance minister Nirmala Sitharaman told Network18 that “one instance, however much talked about globally it may be, I would think is not going to be indicative of how well Indian financial markets are governed.”
On Thursday, S&P Dow Jones Indices said it would drop the group’s flagship Adani Enterprises from widely used sustainability indexes onTuesday (7), which would blunt their appeal for environment-conscious investors, Reuters added.
