Can India’s stock market remain strong despite the Adani Group’s mounting losses?

Adani Group’s stocks lost more than US$65 billion since a report by short seller Hindenburg Research accused the conglomerate of accounting fraud

Despite India’s stock market hitting a three-month low, the country remains on track to be the fastest-growing major economy according to a government report

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India’s benchmark index has fallen to a three-month low as a slide in shares of conglomerate Adani group over fraud allegations clouds investors’ sentiment. Photo: Reuters/File

Published: 6:00pm, 1 Feb 2023Updated: 6:28pm, 1 Feb 2023

India’s benchmark index – Asia’s best-performing stock market in a volatile 2022 – fell to a three-month low this week as a slide in shares of conglomerate the Adani Group over fraud allegations have clouded investors’ sentiment, but analysts say the dip could be a silver lining as it will ease concerns that Indian stocks are overvalued.

Led by Gautam Adani, Asia’s richest person, the group has interests throughout India, from mines and ports to power plants and airports, as well as data centres and defence.

The group’s seven-listed stocks lost more than US$65 billion since a report by US-based short seller Hindenburg Research a week ago accused the conglomerate of accounting fraud.

Overall, the Bombay Stock Exchange rebounded 0.53 per cent in mid-day trading on Wednesday thanks to an investor-friendly budget from the country’s finance minister, that exempts more people from paying income tax.

The controversy over one of India’s wealthiest business groups has triggered concerns about the country’s stock market and whether it will remain robust despite weathering the Russia-Ukraine war, tightening global liquidity and soaring inflation.