Adani Group stocks plummet amid bribery scandal: What investors need to know

The Adani Group, a powerhouse in India's stock market, has been shaken to its core following U.S. prosecutors' indictment of its chairman, Gautam Adani, in a $265 million bribery and fraud scheme.

The fallout has sent shockwaves through global financial markets, with significant implications for investors.

Stock market carnage: A closer look

Adani group's 10 listed stocks had a total market capitalization of about $147 billion at 0411 GMT, compared to $169.08 billion on Tuesday.

Adani Group stocks dragged down the energy sub-index (.NIFTYENR), opens new tab, which lost 3%, while state-owned lenders (.NIFTYPSU), opens new tab dropped 4.6%.

The NSE Nifty 50 (.NSEI), opens new tab was down 1.06% at 23,288.2 points, as of 9:46 a.m. IST, while the BSE Sensex (.BSESN), opens new tab rose 0.87% to 76.912.28.

Impact on bonds

The effects extended to the bond market, with Adani dollar-denominated bonds plunging 3-5 cents in Asian trading. Bonds issued by Adani Ports and Special Economic Zone experienced their largest drop since the 2023 short-seller attack by Hindenburg Research, signaling investor concerns over the conglomerate's creditworthiness.

This isn’t the first time Adani Group stocks have faced turbulence. In February 2023, Hindenburg Research accused the conglomerate of improper use of offshore tax havens and stock manipulation, which triggered a significant sell-off.

While some Adani stocks have since rebounded, this latest scandal renews questions about corporate governance and investor confidence.

Adding to the financial stress, Adani Green Energy canceled a $600 million bond offering following the indictment. This decision underscores the challenges the group faces in raising capital amid heightened scrutiny.

Key takeaways for investors

Adani stocks are likely to remain highly volatile as legal proceedings and investigations unfold, with the slump in bond prices reflecting growing concerns over the conglomerate's ability to meet its debt obligations.

The scandal has heightened worries about transparency and governance within the group, potentially deterring institutional investors. Furthermore, the declines in Adani stocks have weighed on Indian energy and infrastructure indices, creating potential ripple effects for related companies.

The Adani Group faces mounting pressure to restore investor confidence while navigating legal challenges in the U.S. and beyond. For now, investors should brace for continued market turbulence and keep a close eye on developments related to the case.

This scandal serves as a stark reminder of the risks inherent in investing in conglomerates with opaque structures, emphasizing the importance of due diligence in navigating emerging markets.