Few Adani stocks up, Kotak Mahindra down 2% post Hindenburg reply to SEBI

Several stocks of the Adani Group surged in Tuesday’s trading while Kotak Mahindra shares fell after Hindenburg named the Indian lender post SEBI’s notice

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Short-selling in Adani Group shares resulted in gains for 12 firms

Adani stocks saw a $150-billion slump last year after Hindenburg published a damaging 32,000-word report that contained 720 citations

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Several stocks of the Adani Group saw a surge in trading while others performed flat on Tuesday, after the American short seller Hindenburg Research issued a note saying it had received a 46-page show-cause notice from India’s capital market regulator Securities and Exchange Board of India (SEBI). Hindenburg said SEBI’s show-cause notice had alleged that the short seller had violated rules while placing bets on Adani Group stocks.

Soon after the show-cause notice, Hindenburg retaliated claiming that India’s Kotak Mahindra Bank had set up the offshore fund structure to be used by the short seller’s “investor partner to bet against Adani” but SEBI had not named Kotak Mahindra in the notice.

In Tuesday’s trade, after Hindenburg’s reactionary note went public, shares of Kotak Mahindra Bank dropped around 2 per cent.


Meanwhile, Adani Total Gas, Adani Wilmar, Adani Green, Adani Energy Solutions, Ambuja Cements, ACC, and Adani Ports and Special Economic Zone were among Adani stocks that saw an upsurge in Tuesday’s trading session.

Shares of Adani Total Gas shot up by 0.91 per cent, Adani Wilmar by 0.45 per cent, ACC by 0.35 per cent, Adani Energy Solutions by 0.13 per cent, Ambuja Cements by 0.12 per cent and Adani Green by 0.03 per cent. Adani Ports and Special Economic Zone Ltd saw a rise of around 0.6 per cent.

Adani Power stocks dipped 0.24 per cent, while the group’s flagship, Adani Enterprises, dropped a per cent lower in Tuesday’s trading.


On the other hand, Kotak Mahindra Bank shares fell by more than 2 per cent on Tuesday.

Hindenburg’s mention of Kotak in its note following SEBI’s show-cause notice stated: “While SEBI seemingly tied itself in knots to claim jurisdiction over us, its notice conspicuously failed to name the party that has an actual tie to India: Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, which created and oversaw the offshore fund structure used by our investor partner to bet against Adani. Instead it simply named the K-India Opportunities fund and masked the “Kotak” name with the acronym “KMIL”.”

The US-based short seller said Uday Kotak had personally led SEBI’s 2017 Committee on Corporate Governance, adding: “We suspect SEBI’s lack of mention of Kotak or any other Kotak board member may be meant to protect yet another powerful Indian businessman from the prospect of scrutiny, a role SEBI seems to embrace”.


The controversy started last year when Hindenburg published a 32,000-word report that contained 720 citations and ran into 106 pages, alleging that the Adani Group manipulated stocks and engaged in accounting fraud for decades. As a result of the report, Adani stocks witnessed a $150-billion slump.

Following the latest development, Hindenburg has described SEBI’s show-cause notice as “nonsense”, and added that it was “concocted to serve a pre-ordained purpose: an attempt to silence and intimidate those who expose corruption and fraud perpetrated by the most powerful individuals in India”.

“Much of the notice seemed designed to imply that our legal and disclosed investment stance was something secret or insidious, or to advance novel legal arguments claiming jurisdiction over us. Note that we are a US-based research firm with zero Indian entities, employees, consultants or operations. Some of these arguments seemed circular,”

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