The Hindenburg report against Adani Group which led to a market crash in January benefited a dozen companies including foreign portfolio investors and foreign institutional investors in tax havens who short sold shares held in Adani Group companies.
This was revealed by a report from The Indian Express, who cited the Enforcement Directorate's (ED) probe into the Hindenburg report.
Short selling is an investing technique which includes selling of borrowed securities to later buy them back when the price falls. Investors bet on profits based on a fall in share prices in this model.
According to The Indian Express the ED shared its findings with the markets regulator Securities and Exchange Board of India (SEBI) in July.
None of the short sellers including three from India and four from Mauritius disclosed their ownership structure to income tax authorities, they reported citing sources.
Some of these companies allegedly opened positions just two to three days before the Hindenburg report was published on January 24, mentioned the report. Some otherwise were dabbling in short trades for the first time.
It may be noted that foreign investors that are registered with SEBI are allowed to trade in derivatives, the financial instrument which allows short-term trades by offsetting the market risks.
The report highlighted the irregular earning patterns of some of these short sellers. The SEBI passed an order against the promoter of one fo the Indian companies for misleading investors, said the report.
In January 2023, Hindenburg rocked the Adani Group after alleging that industrialist Gautam Adani used shell companies in Mauritius to manipulate the stock prices of Adani Group firms.
Subsequently, the Adani Group denied all charges calling its report a "calculated attack" on India, its institutions and the growth story.
In the aftermath of the report, the Supreme Court of India (SC) had asked the SEBI to probe the matter and submit a report.
Earlier, the panel experts appointed by the apex court submitted that there was no price manipulation on the part of Adani Group and that the conglomerate had taken necessary steps to comfort the retail investors.
