Indian equity benchmarks Sensex and Nifty 50 closed Monday’s session nearly unchanged, shrugging off initial losses triggered by a report from US short-seller Hindenburg Research alleging conflicts of interest involving the chairperson of the country’s market regulator.
The 30-share BSE Sensex ended lower by 56.99 points or 0.07% at 79,648.92, while the Nifty 50 closed at 24,347.00, down 20.50 points or 0.08%. The indices had opened in the red but gained back all of the lost ground by the afternoon session.
Hindenburg Report Alleges Conflicts of Interest
Hindenburg Research’s report claimed that SEBI Chairperson Madhabi Puri Buch and her husband Dhaval Buch have stakes in offshore funds linked to the Adani Group, raising concerns about a potential conflict of interest in her role overseeing investigations into the conglomerate.
The report also alleged a lack of transparency around Buch’s consulting firms, with one company called Agora Advisory (India) still 99% owned by her while generating revenue as she oversees probes into Adani.
Hindenburg further accused Buch of using her personal email for business dealings under her husband’s name while serving as a SEBI Whole Time Member. The short-seller demanded a public investigation and transparency around her consulting clients and engagements.
SEBI Dismisses Allegations as “Inappropriate”
In response, SEBI said the report was “inappropriate” and that it has “adequate internal mechanisms for addressing issues relating to conflict of interest.” The regulator emphasized that Buch has made relevant disclosures of her securities holdings and transfers, and has recused herself from matters involving potential conflicts.
Buch and her husband have strongly denied the allegations, labeling them as “baseless” and asserting that all required financial disclosures have been made to SEBI. They expressed willingness to provide further documentation if requested.
Markets Shrug Off Report’s Impact
Despite the controversy, Indian stocks showed resilience, with the benchmark indices recovering from their early losses. Market players felt the report would have a limited impact on Dalal Street, as the “shock value” was lower compared to Hindenburg’s previous allegations against the Adani Group in January 2023.
Adani Group stocks, which had opened lower, also pared their losses as the session progressed. Adani Enterprises, which had tanked over 4% in early trade, was trading at Rs 3,060.15, down 3.55% from its previous close.
Foreign Investors Remain Net Sellers
The report comes at a time when foreign investors have turned net sellers in August, pulling out over Rs 13,400 crore from equities due to unwinding of the yen carry trade and US recession fears.
However, the domestic indices managed to stay afloat, supported by positive global cues and new inflows of foreign money. Asian markets opened higher on Monday, with Japan’s Nikkei 225 up 0.51% and the Korean Kospi gaining 1.24%.
Outlook for the Week
The week ahead is expected to be eventful, with more than 500 companies, including Hindustan Copper, Balrampur Chinni Mills, Vodafone Idea, Nalco, NMDC, Voltas, IRFC and Voltas, scheduled to report their financial results on Monday.
Analysts will also be closely watching the last leg of the quarterly earnings season and economic indicators for further cues on the market’s direction. The Nifty is currently retracing its previous decline and could potentially rally towards the 24,520 to 24,651 range, where the 50% and 61.8% Fibonacci retracement levels of the drop are located.
Despite the volatility and the Hindenburg report, the Indian markets have shown resilience, with investors remaining cautiously optimistic about the long-term prospects of the economy. As the week progresses, all eyes will be on how the markets navigate the upcoming earnings announcements and global developments.
