Hindenburg fallout? Sensex, Nifty crash as 8 of Adani Group stocks hit lower circuit; Bank Nifty sinks 1400 points: 5 key factors behind today's sell-off

Adani Group Share News, Sensex, Nifty Today: Equity benchmarks Sensex and Nifty plunged over 1 per cent for a second straight session on Friday dragged down by heavy selling in banking, financials, and oil stocks amid foreign fund outflows. Massive selling in the Adani group stocks also added to the overall bearish trend. The 30-share BSE benchmark tanked 874.16 points or 1.45 per cent, its biggest single day slide in more than a month, to settle at 59,330.90. During the day, it plunged 1,230.36 points or 2.04 per cent to 58,974.70. The broader NSE Nifty fell 287.60 points or 1.61 per cent to end at 17,604.35, marking its worst single-day fall since December 23, 2022.

"The sharp slump in the Indian market was triggered by an unfavourable research report on Asia's richest promoter group companies. This is also affecting the banking stocks even though the results of the sector are optimistic due to high group lending, indicating potential risk. PSU banks are the most impacted compared to private banks owing to high exposure. The FIIs' cautious stance ahead of the Union Budget and FOMC meetings also fuelled the collapse," said Vinod Nair, Head of Research at Geojit Financial Services.

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Sell-off continues in Adani Group stocks

Adani Group shares crashed for the second straight trading day on Friday. All the 7 listed shares of the group plummet 5 to 20 per cent. Most stocks were caught in lower circuits. While Adani Ports lost nearly 20 per cent to hit two-year-low at Rs 572.25, Adani Transmission, Adani Green and Adani Total Gas hit the lower circuit of 20 per cent. The flagship company of Adani Group -- Adani Enterprises was down by 14 per cent. Adani Power, Adani Wilmar too hit the lower circuit of 5 per cent. 

Earlier on Wednesday, the seven listed companies lost more than $10 billion in market capitalisation. 

In two sessions (January 25 and 27), the Adani group firms have lost a whopping Rs 4,17,824.79 crore from their market valuation. The market valuation of Adani Total Gas plummeted Rs 1,04,580.93 crore, while that of Adani Transmission eroded by Rs 83,265.95 crore. Adani Enterprises market capitalisation (mcap) fell by Rs 77,588.47 crore, Adani Green Energy lost Rs 67,962.91 crore and Adani Ports (Rs 35,048.25 crore). The market valuation of Ambuja Cements declined by Rs 23,311.47 crore, Adani Power by Rs 10,317.31 crore, ACC by Rs 8,490.8 crore and Adani Wilmar by Rs 7,258.7 crore.

The shares of Adani Group are under pressure after New York-based investor research firm Hindenburg Research in a report accused the conglomerate of "brazen stock manipulation and accounting fraud scheme over the course of decades". The Ahmedabad headquartered company, however, termed the report “malicious combination of selective misinformation and stale".

The report comes ahead of a Rs 20,000 crore follow-on share sale of Adani Group's flagship Adani Enterprises. The Follow-on Public Offer (FPO) opened on January 27 and will close on January 31.

Bank stocks drag

The elevated valuations of Adani Groups stocks have been a concern for investors. The recent slide in Adani Group stocks has weighed down the banking and financial shares. The company's total gross debt in the financial year ending March 31, 2022, was around Rs 2 trillion.

The Nifty Bank index fell more than 2 per cent on Friday to slip below 41,000 for the first time since November 3 last year. All 12 stocks were trading in deep red dragged by SBI, PNB, ICICI Bank, HDFC Bank and Axis Bank - all down by 2 to 3 per cent

In the previous trading session on Wednesday, the index had ended nearly 1200 points lower amid heavy selling in the banking stocks.

"Adani stocks are likely to continue under pressure due to the fallout from the Hindenburg report. The elevated valuations of Adani stocks are a serious concern," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

FIIs selling

The heavy selling in all Adani Group stocks and banking stocks weighed on the market sentiments today, as a result, the domestic benchmark indices tumbled sharply lower. Investors lost around Rs 3.23 lakh crore worth of wealth as the market capitalisation of BSE-listed companies decreased to Rs 272.1 lakh crore, according to BSE data at 10:40 AM.

Foreign Institutional Investors (FII) have offloaded equities worth more than Rs 3,000 crore in the last 2 trading sessions. On Tuesday, FIIs sold shares worth Rs 760.51 crore, followed by Rs 2,393.94 crore on Wednesday, according to exchange data.

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Technical breakdown

Devarsh Vakil, Deputy Head of Retail Research, HDFC securities, said that Nifty seems to have given a fresh breakdown. The index had fallen sharply on January 25 -- 1.25 per cent or 226.4 points at 17891.9, after short seller Hindenburg raised concerns over the Adani Group’s debt position. 17761-17774 band is the immediate support for Nifty below which the downtrend could accelerate. On up moves, 18145 could prove to be a resistance.

SEBI releases F&O report

Securities and Exchange Board of India (SEBI) has released a report today in which it revealed that 9 out of 10 equity F&O traders lose money. According to the data, F&O traders make an average loss of Rs 1.1 lakh during the financial year 2022. As high as 90 per cent of active traders incurred an average loss of Rs 1.25 lakh.

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