Markets Take A Severe Beating, Courtesy Adani Group

The Indian benchmark indices gained in the initial sessions of the fortnight, powered by robust gains in information technology stocks, mirroring the strength in global technology equities. Following that, the indices tumbled by around 3 per cent in just two sessions, severely damaged by power, utility and oil and gas sector stocks as a result of allegations made by the US-based investment research firm Hindenburg Research against the Adani Group, resulting in a bloodbath in these sectors. Adani Group stocks experienced heavy selling pressure.

After hitting their respective lower circuits for several sessions, the shares of Adani Power fell nearly 30 per cent while shares of Adani Transmission, Adani Green Energy and Adani Total Gas plunged more than 50 per cent during the fortnight. Sectoral performance was also harmed as a result of the event with the BSE Power and BSE Oil and Gas indices slumping 19.51 and 16.41 per cent, respectively. The Adani Group took a decision to withdraw the fully subscribed `20,000 crore FPO in order to safeguard the interests of investors in a volatile market environment.

Due to the exposure to the Adani Group, banking stocks were also negatively affected. India’s largest lender, State Bank of India lost more than 9 per cent over the past two weeks. On the other side, automobile and fast moving consumer goods (FMCG) stocks maintained their winning streaks and attempted to offset market losses. Maruti Suzuki, Bajaj Auto and TVS Motor Company were among the Top Gainers in the automotive sector while ITC led the rally in the FMCG sector with gains of more than 12 per cent over the fortnight.

The BSE Sensex recovered from previous losses with relief from ITC, Mahindra and Mahindra and Titan closing the fortnight 0.16 per cent lower. Meanwhile, the Nifty 50 index fell 1.46 per cent as a result of heavy losses in the broader markets. Broader indices underperformed the main indices by a significant margin, losing more than 2 per cent each. While DIIs were net buyers over the past two weeks, FIIs have turned to being net sellers. The FII outflow was recorded at ₹23,797.20 crore whereas DII inflow was recorded at ₹21,395.04 crore in the past 15 days. The Union Budget 2023-24 sparked market optimism with its focus more on infrastructure and investment, green growth and the financial sector. 

A capital investment of ₹10 lakh crore, a sharp increase of 33 per cent to enhance growth potential, emphasis on creation of new jobs and drawing in private investments were some of the main announcements. With the tax exemption limit rising to ₹3 lakhs, the number of tax slabs is also reduced. Additionally, the rebate limit was raised to ₹7 lakhs, meaning that under the new tax regime individuals with income up to ₹7 lakhs are not required to pay any taxes. The budget finally made the middle-class and salaried taxpayers heave a sigh of relief. In fact, the budget turned out to be the saving grace amidst the otherwise chaotic scenario in the trading arena

As a result of allegations made by Hindenburg Research against the Adani Group, the indices plummeted, causing a bloodbath in the power, utility and oil and gas sectors