Companies That Benefitted From Short Selling In Adani Group Shares

 

A recent report by The Indian Express reveals that a dozen companies, including foreign portfolio investors and foreign institutional investors based in tax havens, were the primary beneficiaries of short selling in shares of Adani Group companies. This information comes from an Enforcement Directorate investigation linked to the Hindenburg report, which triggered a market crash in January.

Short selling involves borrowing securities to sell and then repurchasing them at a lower price. Investors profit from the decline in share prices through this method.

The Enforcement Directorate reportedly shared its findings with the Securities and Exchange Board of India (SEBI) in July. Notably, the short sellers, which encompassed three Indian entities and four from Mauritius, had not disclosed their ownership structures to income tax authorities, according to the report.

Some of these companies had allegedly established positions just a few days before the Hindenburg report's release on January 24. Among them, a few were engaging in short trades for the first time. Foreign investors registered with SEBI are permitted to engage in derivative trading, which involves managing market risks through short-term transactions.

The report also highlighted irregular earning patterns among some of these short sellers. One of the Indian firms' promoters had faced a SEBI order for misleading investors.

The Hindenburg report had accused industrialist Gautam Adani of using shell companies in Mauritius to manipulate stock prices of Adani Group firms. The Adani Group refuted these allegations and characterized the report as a "calculated attack" on India, its institutions, and its growth narrative.

In response, the Supreme Court directed SEBI to investigate the matter and provide a report. A panel of experts appointed by the Supreme Court had earlier stated that there was no evidence of price manipulation by the Adani Group. The conglomerate had also taken measures to reassure retail investors.