Adani Enterprises (NSE: ADANIENT) Share Price Crashes 66%, Lands On ASM Radar

Key Takeaways:

  • Adani Group's woes do not seem to be ending following the Hindenburg report debacle.
  • Adani Enterprises share price dropped 66% between Feb 1 and Feb 3.
  • Adani Group's reply largely centered on the Hindenburg report being an attack on India's nationalism.
Adani Enterprises' share price has plunged dramatically after the release of the Hindenberg report.
Adani Enterprises’ share price has plunged dramatically after the release of the Hindenberg report.

PATNA ( — Adani Enterprises’ share price (NSE: ADANIENT) continued its dramatic plunge in Feb as the stock dropped more than 66% in the first three days of Feb 2023. For now, the Indian conglomerate’s tactics to stop the market rout have backfired disastrously.

The Adani Group, led by chairperson Gautam Adani, has been on a downhill collapse after US short-seller Hinderburg Research released a report calling the group “the largest con in corporate history.”

The Hindenburg report alleged that the (then) $218 billion conglomerate Adani Group was engaged in stock manipulation and accounting fraud schemes. In its reply to Hinderburg, Adani Enterprises allegedly avoided substantive issues and instead “stoked a nationalist narrative.”

Hindenburg Research noted that Adani claimed the research firm had violated several “securities and foreign exchange laws” but failed to name any law. Furthermore, Adani Group attempted to coalesce its rise over the past few years with the success of India itself.

Fraud Cannot Be Obfuscated By Nationalism Or A Bloated Response That Ignores Every Key Allegation We Raised

Hindenburg Research noted in its reply.

Hindenburg claimed that Gautam Adani and the Adani Group were responsible for holding back India’s development. The research firm alleged that the Adani Group has “draped itself in the Indian flag while systematically looting the nation.”

Moreover, Adani Enterprises’ reply consisted of 30 pages focused on report-related issues, 330 pages of court records, and 53 pages of high-level financials, general information, and “irrelevant” details of its corporate initiatives.

Hindenburg Research's response to Adani's reply
Hindenburg Research’s response to Adani’s reply. Source: Twitter

Gautam Adani’s firm failed to provide specific answers to 62 of Hindenburg’s 88 questions. Moreover, the ones that Adani Group did answer either confirmed or attempted to sidestep Hindenburg’s findings.

For most of the allegations, Adani Enterprises either feigned ignorance or denied association with the person or entity involved.

Adani Lands On ASM Radar

Adani Enterprises pulled back its Follow-on Public Offering (FPO), stating that the conglomerate was merely looking to “protect the interest of its investing community.”

However, the decision painted the firm in a not-so-flattering light. In addition, the NSE put Adani Enterprises, Adani Ports and Special Economic Zone, and Ambuja Cement under the Additional Surveillance Measure (ASM) framework.

The ASM framework helps deter traders from taking outsized risks by hiking margins and reducing the liquidity at their disposal. ASM enhances market integrity and safeguards the interest of investors by alerting market participants to be extra cautious when dealing with these securities.

Adani Enterprises and other firms of the Adani Group are listed in the NSE ASM list
Adani Enterprises and other firms of the Adani Group are listed in the NSE ASM list. Source: NSE

Secondly, the ASM framework urges investors to do their due diligence before dealing in shares put on the ASM list. Adani Enterprises would need to provide clarification to the exchange about any corporate announcements in the near future.

Moreover, the exchange’s website would display a surveillance dashboard mentioning the firm’s name and other relevant information.

The NSE has put Adani Power Limited on the long-term ASM list, while Adani Enterprises, Adani Green Energy Limited, Adani Ports and SEZ, and Adani Transmission are on the short-term ASM list.

In other news, S&P Dow Jones Indices stated that it would remove the Adani Enterprises shares from the sustainability indices with effect from Feb 7.

Adani Enterprises (XBOM: 512599) will be removed from the Dow Jones Sustainability indices following a media & stakeholder analysis triggered by allegations of stock manipulation and accounting fraud.

S&P Dow Jones Indices said in a note

The recent market rout has wiped over $100 billion (nearly INR 8.2 trillion) from the Adani group’s valuation.

Adani Enterprises Paints Faint Recovery

Adani Enterprises share price painted a faint recovery during trading on Feb 3. ADANIENT price dropped to a multi-month low of INR 1,017 ($12.42) on Feb 3, following a more than 66% drop from Feb 1’s high of INR 3,010.8 ($36.7).

However, traders pushed back to recover some of the lost ground, helping Adani Enterprise shares price form a daily high near INR 1,679.9.

However, it seems unlikely that the freefall in the Adani share price has stopped, making Feb 3’s recovery likely a short-term bounce before a lower move below immediate support. If Adani Enterprises share price fails to establish an up-move, ADANIENT price might drop to support near INR 1,324.45 ($16.2)

ADANIENT/INR price chart with RSI
ADANIENT/INR price chart with RSI. Source:

Moreover, breaching immediate support might result in the liquidation of more shorting options, resulting in the Adani Enterprise share price dropping to INR 961.4 ($11.7) before recovering.

On the other hand, the recent market rout has pushed ADANIENT’s RSI into the oversold region, with a value of 13.21 on the daily charts. Oversold RSI levels traditionally predict a bullish trend reversal for the underlying asset. Hence, traders often consider the pattern a buy signal.

As a result, if the Adani Enterprises share price might rise to INR 1,755.75 ($21.4). Breaking and consolidating above immediate support might help boost investor confidence in the beleaguered firm.

As a result, Adani Enterprises share might rise to challenge resistance near INR 2,135.3 ($26.1) before downside corrections pare gains.

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