Modi’s slim victory wipes US$45 billion off Adani Group stocks in worst one-day rout
FOR the Adani empire’s stocks, an underwhelming election win for Narendra Modi’s party is worse than a short-seller attack.
All 10 Adani Group shares plummeted on Tuesday (Jun 4) after the Modi-led political alliance failed to deliver the landslide electoral victory predicted by exit polls, wiping out almost US$45 billion in group market value.
It was the biggest single-day rout the conglomerate has faced, dwarfing the hit from Hindenburg Research’s allegations of corporate malfeasance over a year ago. The group’s market value plunged to US$189 billion.
The sell-off sliced almost US$25 billion off Gautam Adani’s net worth, which fell to US$97.5 billion, according to Bloomberg billionaires Index, toppling him as Asia’s richest person. He had reclaimed that top spot just days earlier when bullish exit polls for Modi boosted the group’s market value by US$20 billion on Monday.
The market gyrations are a stark reminder that investors see the conglomerate’s fortunes as being tied to Modi’s mandate as India’s leader. The Adani Group and its founder have maintained that they have no improper relationship with the government and can execute their ambitious infrastructure projects under any administration.
Nevertheless, Adani knows he’s a heatscore in India’s election, with opposition leaders frequently invoking his name at campaign rallies and Modi himself unexpectedly accusing his rivals of receiving illegal cash from the billionaire at one point in the long campaign.
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A coterie of advisers have asked the tycoon to avoid posting anything on social media about initial electoral results, said a person familiar with the matter, counselling him to say quiet until the new federal government is formed.
The Adani Group did not immediately respond to a request for comment.
Both Modi and Adani hail from the western Indian state of Gujarat and have risen in tandem, with the tycoon’s sprawling business built on a close alignment with Modi’s nation-building priorities in infrastructure, green energy, defence and digital services.
Adani Ports and Special Economic Zone and Adani Energy Solutions led the pack’s losses, with shares plunging 21 per cent and 20 per cent respectively. Flagship Adani Enterprises nosedived 19 per cent on Tuesday.
While this was the steepest single-day stock drop for the Adani group, overall losses in the wake of the Hindenburg attack last year were bigger, crossing US$150 billion at their peak. The group had regained almost all of that value through Monday’s close.
More broadly, India’s NSE Nifty 50 Index tumbled 5.9 per cent Tuesday, its worst day in more than four years as investors fretted that a slim victory for the Modi-led coalition would hinder the new government’s ability to push through reforms. BLOOMBERG
