India’s benchmark stock indices faced a significant downturn on Thursday as shares of Adani group companies plummeted following the indictment of Gautam Adani, chairman of the Adani conglomerate, by U.S. authorities. The allegations, which accuse Adani and key associates of orchestrating a $265 million bribery scheme to secure lucrative solar power projects, have wiped out $22 billion in the group’s combined market capitalization.
The NSE Nifty 50 fell 0.78%, closing at 23,336.9 points, while the BSE Sensex dropped 0.66%, settling at 77,066.96. Shares of Adani Enterprises, the group’s flagship company, sank by 22.3%, with Adani Ports experiencing a steep 20% loss. Other group companies recorded declines ranging from 8.5% to 20%.
Allegations and Market Reactions
U.S. authorities have charged Gautam Adani, his nephew Sagar Adani, and other defendants with paying bribes to Indian government officials to secure contracts projected to generate $2 billion in profits over 20 years. These contracts reportedly include the development of India’s largest solar power project.
Saurabh Jain, Assistant Vice President of Retail Equities Research at SMC Global Securities, commented, “Investors do not like any lapse of corporate governance, and till there is clarity, investors will shy away from the group.”
The news has also impacted dollar bonds issued by Adani companies, which fell sharply in early Asia trading.
Sector-Wide Impact
The allegations have rippled across the broader market:
- State-owned lenders, many of which have substantial exposure to Adani entities, witnessed a sector-wide decline of 3.6%.
- The energy sub-index dropped by 2.2%, adding to market woes.
- Small- and mid-cap indices fell by about 0.5%, reflecting cautious investor sentiment.
“Banks with significant exposure to the Adani group could see further pressure if these allegations lead to material financial fallout,” added Jain.
Other notable market movers included Dr. Reddy’s Laboratories, which fell 3% following concerns raised by the U.S. FDA about regulatory compliance at one of its manufacturing facilities.
The allegations against Gautam Adani come at a time when the group has already been under scrutiny for corporate governance practices. The uncertainty surrounding the case is expected to weigh on investor confidence and could impact sectors beyond energy and banking if the situation escalates.
Further updates from the Adani group and U.S. authorities are awaited as the story unfolds.