Soaring Adani despite West & Congress' calumny

The Adani Group, helmed by India’s richest man Gautam Adani, has demonstrated remarkable resilience in the face of adversity. While the conglomerate has been under scrutiny following a US indictment and criticism from Indian political opposition, its stock market performance over the past week has painted a picture of recovery and investor confidence.

Adani shares rally amid allegations

Despite allegations under the US Foreign Corrupt Practices Act (FCPA) and related charges of securities and wire fraud, the Adani Group’s stocks have soared remarkably. Adani Green Energy, Adani Energy Solutions, and Adani Total Gas have seen a robust rally on the National Stock Exchange (NSE), with gains of up to 22% in intraday trade on Friday.  

The resurgence comes in the wake of Adani Green Energy’s clarification denying FCPA violations while acknowledging other charges. Investors appear undeterred by the allegations, focusing instead on the group’s operational strength and financial backing.  

Shares of Adani Green Energy rose 23% to ₹1,337.20 on the NSE, marking a 54% recovery from its 52-week low of ₹870.25 touched just days earlier. Analysts like Osho Krishan and AR Ramachandran foresee further growth, with targets ranging between ₹1,400 and ₹1,440, provided the stock clears resistance levels.  

Adani Energy Solutions also rallied 20% to ₹896.75, recovering 48% from its recent low. Meanwhile, Adani Total Gas surged 7% to ₹862, a recovery of 51% from its previous nadir of ₹572.55. These big trading volumes across these stocks highlight sustained investor interest.  

Institutional support bolsters confidence  

A major factor driving the rally has been continued institutional support. The Abu Dhabi-based International Holding Company (IHC), a sovereign wealth fund managing close to $100 billion, reaffirmed its confidence in the Adani Group despite the indictment. Similarly, Japan’s largest banks have maintained their financial ties with Adani, signalling trust in the conglomerate’s long-term stability.  

Backing this sentiment, CRISIL Ratings stated on Friday that the Adani Group has sufficient liquidity and operational cash flow to meet its debt obligations and capital expenditures. The rating agency confirmed no adverse actions from lenders or investors, underscoring the group’s financial robustness.  

Challenges persist: US indictments and political opposition  

The US indictment against Gautam Adani, his nephew Sagar Adani, and AGEL managing director Vneet S Jaain alleges a scheme involving bribery to secure Indian power supply contracts and misleading American investors. The Adani Group has categorically denied the accusations, terming them baseless and pledging to pursue all legal remedies.

The charges come on the heels of earlier allegations from Hindenburg Research in January last year, which accused the group of improperly using offshore tax havens. The Indian conglomerate has consistently refuted these claims, yet they have contributed to heightened scrutiny from global firms like Barclays Plc, which is reportedly reassessing its exposure to the group.

Domestically, Gautam Adani has faced vocal criticism from Congress leader Rahul Gandhi, who has frequently targeted the industrialist over his proximity to the ruling government and alleged monopolistic practices. Despite this political cacophony, the Adani Group’s financial performance suggests it has retained strong investor trust.  

Market dynamics and technical insights  

The Adani Group’s recovery also reflects technical market trends. The inclusion of 45 stocks, including Adani Group companies, in the futures and options (F&O) segment on Friday has removed fixed circuit limits for these equities. This has allowed for larger price movements, contributing to the huge gains observed in recent trading sessions.  

“Rs 1,400 is likely to be seen as an intermediate hurdle and a decisive surpass could only trigger fresh buying traction,” remarked Osho Krishan, Senior Research Analyst at Angel One. Similarly, AR Ramachandran noted that ₹1,000 remains a strong support level, ensuring the stock’s stability amid market fluctuations.  

For traders, the technical outlook remains optimistic. Ravi Singh, Senior Vice-President at Religare Broking, advises maintaining stop-loss levels around ₹1,150 while targeting ₹1,440 for Adani Green Energy.  

Adani Group’s path forward  

The Adani Group’s recovery amidst legal and political headwinds demonstrates the conglomerate’s ability to navigate complex challenges. Investor confidence, bolstered by institutional backing and positive market dynamics, has been instrumental in its recent resurgence.  

While the legal challenges in the US are far from over, the Adani Group has reiterated its commitment to defending its reputation and business interests. The conglomerate’s focus on operational strength, coupled with robust institutional support, suggests it remains well-positioned to weather these storms.  

In India, political opposition from figures like Rahul Gandhi and scrutiny from activists will likely continue. However, the group’s recent market performance underscores its resilience and ability to attract sustained investor interest.

The Adani Group’s recent stock market rally highlights a paradox: a conglomerate under intense scrutiny yet thriving in the financial arena. With institutional backing, robust financial health, and investor optimism, Gautam Adani’s empire appears determined to forge ahead, demonstrating that controversies, however intense, are not insurmountable barriers to growth.