Why latest attacks by Hindenburg Research on India are not credible

In a recent report dated August 10, short-seller Hindenburg Research has targeted the credibility of India's financial regulatory framework by attempting to link the current Securities and Exchange Board of India (Sebi) chairperson, Madhabi Puri Buch, to the Adani Group through decade-old investments made by her husband. This latest attack, which lacks concrete evidence, appears to be a strategic move to undermine India's booming markets and destabilise investor confidence.

Core Allegations

Hindenburg Research, which allegedly has Indian backers, alleges that Madhabi Puri Buch, before assuming her role at Sebi in 2017, had personal investments in two offshore funds linked to the Adani Group. The report claims that because these accounts were operated by her husband post-2017, there may be a conflict of interest in how Sebi handles investigations related to Adani Enterprises. However, the report fails to provide any solid evidence of wrongdoing, instead relying on speculation and insinuation.

Baseless Attack

The investments in question were made in 2015, long before Buch became Sebi's chairperson, and were fully disclosed. Moreover, they were private investments made in a personal capacity, which have no direct bearing on her professional duties at Sebi. By raising these decade-old investments now, Hindenburg is attempting to create a narrative of bias and corruption within Sebi without offering any substantial proof.

This tactic is not new. Hindenburg Research, known for its short-selling strategies, has previously released reports aimed at causing panic in the stock market. Their January 2023 report on the Adani Group also tried to stir fear among investors, but it ultimately failed to derail the upward momentum of Indian markets. Since March 2023, Adani Enterprises and related companies have experienced a bull run, further discrediting Hindenburg's earlier claims.

Motivations behind Attack

Hindenburg's latest report appears to be a calculated attempt to sow doubt and chaos in India's financial markets. The timing of the report, when India's macroeconomic fundamentals are strong and companies are registering high growth, suggests that the group aims to disrupt the current bull run and undermine the trust of both international and domestic investors.

Furthermore, the report's focus on a non-issue — personal investments made nearly a decade ago — seems designed to erode confidence in India's regulatory bodies. By attacking the credibility of Sebi and its Chairperson, Hindenburg is indirectly challenging the integrity of India's financial system and the policies that have contributed to its rapid post-Covid recovery.

Broader Implications

If such unfounded attacks were to gain traction, they could have far-reaching consequences. A precedent where private individuals are criminalised for past investment decisions simply because they now hold public office would discourage talented professionals from taking up public positions. This could weaken India's governance framework, as fewer private sector leaders would be willing to bring their expertise to public service.

Moreover, these attacks threaten to undermine the growing participation of retail investors in India's stock market. Retail investments have been on the rise, reflecting the public's confidence in the Modi government's economic policies and market regulations. Hindenburg's report, by attempting to incite mass panic, seeks to destabilise this confidence and derail India's growth story.

Hindenburg Research's latest report on India is a transparent attempt to manipulate the market and damage the country's financial reputation. With no concrete evidence to support their allegations, the report should be seen for what it is: a strategic move by a confessed short-seller to disrupt the Indian markets. India's robust economic fundamentals, coupled with the trust in its regulatory bodies, will likely withstand this latest attempt at market manipulation.