Short Selling In Adani Group Shares Benefitted 12 Companies: Report

Around a dozen companies, including foreign portfolio investors and foreign institutional investors in tax havens, were reportedly the main beneficiaries of short selling in shares of Adani Group companies, The Indian Express reported citing an Enforcement Directorate probe into the Hindenburg report.

The report by the US short-seller had led to a market crash in January this year.

Short selling is an investment technique where securities are borrowed to sell and later bought back when the price falls.

This allows investors to profit from a decrease in share prices.

In July, the Enforcement Directorate shared its findings with the Securities and Exchange Board of India (SEBI), the country's markets regulator, according to the Indian Express.

As per the sources cited in the IE report, none of the short sellers, including three from India and four from Mauritius, had disclosed their ownership structures to income tax authorities.

Some of these companies has been reportedly accused of opening positions two to three days before the publication of the Hindenburg report on 24 January.

Additionally, some of these companies were engaging in short trades for the first time. Foreign investors who are registered with SEBI are allowed to trade in derivatives, which involves offsetting market risks through short-term trades.

The report also highlighted the irregular earnings patterns of some of these short sellers.

It stated that SEBI had taken action against the promoter of one of the Indian firms for misleading investors.

Hindenburg's allegations included the claim that industrialist Gautam Adani used shell companies in Mauritius to manipulate stock prices of Adani Group companies.

The Adani Group strongly denied all accusations and criticised the report as a "calculated attack" on India, its institutions, and growth story. The Supreme Court had asked SEBI to conduct an investigation into the case and submit a report.

Previously, a group of experts appointed by the Supreme Court submitted that there was no price manipulation on the part of Adani Group and that the conglomerate had taken necessary steps to comfort retail investors.