Adani Stocks Fall Up to 20%: Should You Buy, Hold, or Sell?

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Stocks in News | On 21 November 2024, Adani Group stocks suffered a steep decline, dropping by as much as 20% and erasing a market capitalization of nearly Rs 2 lakh crore. This crash followed bribery charges filed by US federal prosecutors against the group's founder, Gautam Adani. Stocks such as Adani Enterprises, Adani Green Energy, and Adani Energy Solutions were significantly impacted, leaving investors questioning their next move.

What Triggered the Crash in Adani Stocks?

The Adani Group faces mounting scrutiny after allegations of a $250 million (Rs 2,100 crore) bribery scheme surfaced. According to an indictment filed in Brooklyn, New York, Gautam Adani, alongside Sagar R Adani and Vineet S Jain, allegedly engaged in unethical practices to secure solar energy contracts in India. The charges include:

  • False statements made to US investors
  • Obstruction of justice by deleting electronic evidence
  • Misleading investigations by the Justice Department, SEC, and FBI

Adding to the criminal case, the Securities and Exchange Commission (SEC) has filed a separate civil lawsuit, intensifying the Adani Group's legal woes.

Impact on Adani's International Securities

The ripple effects of these allegations extended beyond the stock market, hitting Adani's dollar-denominated bonds:

  • Adani Green Energy bonds issued in March fell by 15 cents — the sharpest drop ever recorded.
  • Adani Electricity Mumbai bonds due in February 2030 dropped 8.6 cents on the dollar.

These bond declines are the steepest since the 2023 Hindenburg Research report, which wiped off Rs 12 lakh crore from the group’s combined market and bond value.

Expert Opinions: Will Adani News Affect the Indian Markets Long-Term?

Despite the severity of the allegations, some market experts believe the impact on the Indian markets may be short-lived. Venugopal Garre, Head of Research at Bernstein India, remarked on CNBC TV18:

“These incidents are not specific to India. Such incidents tend to be short-term in nature given the nature of the infrastructure business.” 

Garre noted that while the immediate market reaction is understandable, he anticipates the markets to move past the news within a few days to a week. “We wouldn’t read too much into the Adani Group news,” he added, reassuring investors that broader market trends remain unaffected.

What Should Investors Do Now?

1. Assess Your Investment Goals

If you're a long-term investor, consider the fundamentals of Adani Group companies. While short-term volatility is certain, the group's stronghold in sectors like infrastructure and green energy might offer potential recovery.

2. Monitor Legal Developments Closely

Keep a close watch on updates regarding the allegations and their outcomes. Any escalation could further impact Adani group’s stock prices and investor sentiment.

3. Diversify Your Portfolio

Investing heavily in a single stock or group can be risky. Look into diversified equity funds to mitigate risks tied to individual stocks.

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