A plethora of entities, including overseas portfolio investors and foreign institutional investors sheltered in tax havens, emerged as the primary beneficiaries of short-selling endeavors concerning Adani Group equities, according to an incisive report by the Enforcement Directorate, delved into by The Indian Express. The exposé of this intricate maneuver, which took root subsequent to the Hindenburg report catalyzing a market upheaval in January, has drawn attention to the arcane practice of short-selling wherein securities are borrowed, vended, and subsequently procured at a diminished valuation. Amid this intricate tapestry, stakeholders wagered on and profited from the descent of share values.
The Enforcement Directorate’s in-depth revelations were purportedly shared with the regulatory authority, the Securities and Exchange Board of India (SEBI), during the month of July, as disclosed by sources within the Indian Express. Conspicuously, none of the entities engaged in these speculative undertakings, spanning three from India and four domiciled in Mauritius, ostensibly divulged the intricacies of their ownership structures to the revenue authorities.
Several of these corporations purportedly initiated their positions two to three days anterior to the promulgation of the Hindenburg report on the 24th day of January, as chronicled within the report. Among this assemblage, a contingent was embarking on their maiden foray into the realm of short trades. It merits mention that foreign investors who have garnered registration with SEBI enjoy the privilege of participating in derivatives trading, thereby wielding the tools to engage in abbreviated-term transactions while mitigating market risks.
The same dossier also beckoned attention to aberrant pecuniary patterns exhibited by certain of these short sellers. Pertinently, SEBI had issued a directive against the prime mover of an indigenous enterprise for disseminating misleading information to investors. It’s germane to note that the Hindenburg report proffered allegations contending that industrialist Gautam Adani had leveraged shell entities domiciled in Mauritius to manipulate the market valuation of Adani Group entities. Responding to these allegations, the Adani Group vehemently disclaimed all culpability, branding the report as a “calculated assault” on the nation of India, its institutions, and its narrative of progress.
Notably, the Supreme Court had adjudged it requisite for SEBI to undertake an investigation into the circumstances and furnish a detailed report. A consortium of experts convened under the aegis of the apex court, hitherto, asseverated that no discernible price manipulation could be attributed to the Adani Group. This panel further asseverated that the conglomerate had meticulously undertaken measures to provide succor to retail investors.