Adani Group shares drew retail investors just before US probe pullback

By Chiranjivi Chakraborty

 

India’s retail investors increased their holdings in the Adani Group prior to the shock bribery charges by US authorities against its founder, even as institutions largely pared their stakes.

 

Individual stock holdings in eight of the group’s 10 listed companies rose between December 2022 and September-end this year, according to quarterly shareholding data compiled by Bloomberg. This likely left retail investors exposed to last week’s $30 billion selloff in those shares after US charged Gautam Adani with helping drive a $250 million bribery scheme. The group has denied the allegations. 

  Retail investors have shown a tendency to take on riskier bets amid a booming stock market. They piled into Adani Group firms after their shares cratered following Hindenburg Research’s scathing report last January, reaping significant gains subsequently as the stocks rallied from late 2023 until India’s general elections in May. The rebound nearly reversed the loss of over $150 billion in market value due to the US short seller’s report. 

 

With presence in India’s ports, airports and power generation business, “retail investors see Adani companies as a proxy to economic growth,” said Abhay Agarwal, fund manager at Piper Serica Advisors Ltd. “Institutions have largely shied away, given the lingering concerns around governance.” 

 

The recovery didn’t dissuade overseas funds from paring their holdings in most Adani firms. They added shares only in Adani Ports and Special Economic Zone Ltd., a NSE Nifty 50 Index member, during the 21-month period. This was despite the multi-billion dollar investments by GQG Partners Inc. 

 

Meanwhile, local mutual funds — one of the largest buyer groups of Indian stocks this year — have maintained their scant exposure to the group. The cautious stance has shielded them from the recent turmoil.