Stock Market: Adani ‘virus’ infects banking scrips

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By S Jha

New Delhi, January 27: On a second day trot, the Adani Group of companies along with its recent cement acquisitions were bleeding. With Adani Group known for excessive leverage, the fear factor spread to the banking stocks, tanking heavyweights and the indices.

In early hour of the session, Adani Gas had already hit the 20 per cent lower circuit. Adani Transmission already down with over 17 per cent seems also headed to the lower circuit. The heavyweights in the Adani Group—Adani Enterprises and Adani Port – were also bleeding.

The whole Adani pack has been smashed, wiping out billions of dollars in the valuations in just two days after a research report in the US made allegations of stock manipulation with the help of shell companies based out of the tax havens. Ambuja Cements and ACC, which were recently acquired by the Adani Group, were also bleeding with severe cut. Adani Green was also on the way to the lower circuit of 20 per cent.

While the bourses have been given bloodies noses ahead of the Union Budget, panic seems to have stricken the investors, who look worried at the leverage model of the Adani Group to expand businesses with an aggression to acquire heavyweight companies, which has not been seen for decades in the country. The fear is making the Bank Nifty bleed, reminding episodes of the market meltdown as seen during the 2008 when the collapse of the Lehman Brothers had brought the black swan moments in the global equity markets, wiping out trillions of dollars within a few days, while also pushing the world into recession.

The likes of ICICI bank, SBI, HDFC bank, Axis Bank, Kotak Mahindra Bank went under the hammer of the bears on the bourses, as bears pushed them down by over three per cent on Friday. Some of the banking stocks had already been hammered on Wednesday. Thursday was a national holiday in India on account of the Republic Day.

Clearly showing no signs of relief, the indices made no attempts to recover from the blows of the bears, as investors look wary of the foreign institutional action, who have the capital might to push the Indian stock markets further down if the issue of corporate governance gains prominence among them as had been seen during the revelation of the Satyam scam.

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