Retail Investors Pull Back from Most Adani Companies Amid Fresh Controversy

The number of retail investors in nine out of 11 listed Adani group companies decreased during the recent quarter, following a rise in April-June, according to a Mint analysis based on Capitaline data.

This decline comes after new accusations from Hindenburg Research in August. The research firm accused Securities and Exchange Board of India (SEBI) chair Madhabi Puri Buch of having conflicts of interest, which allegedly interfered with a full investigation into previous claims of stock manipulation and fraud involving the Adani group. Both Adani group and Buch have denied these accusations multiple times.

For example, Adani Green Energy saw its retail investor base fall from 0.73 million in June to 0.61 million by September. Other companies, like Adani Ports SEZ and Adani Wilmar, also saw more than 80,000 retail investors exit.

Retail participation in the broader market (excluding Adani stocks) showed a mixed trend in Nifty50 and Nifty 500 companies. While five out of 10 Nifty50 companies reported a drop in retail ownership, around 34% of 157 Nifty 500 companies also experienced a similar decline.

When Hindenburg’s original report was released on 24 January 2023, Adani group’s market value fell 5% in a single day, losing more than half its value during that quarter. However, despite this sharp drop, individual investors showed resilience, with their numbers rising between December 2022 and March 2023.

Now, the fresh allegations seem to have shaken some of that confidence.

“The combination of declining retail participation and serious accusations against SEBI’s leadership has indeed affected retail sentiment toward Adani-listed firms,” said Atul Parakh, CEO of online trading firm Bigul. “Investors appear more cautious, considering the impact these allegations could have on market integrity and regulatory oversight. They should be careful and conduct thorough research before investing.”

Is Profit-Taking the Real Reason?

Not everyone believes that the new allegations are the main cause of the drop in retail participation.

“The decrease in retail shareholding in some Adani group companies is not significant and may simply be due to profit-taking, with investors moving their money to other more appealing opportunities in the market,” said Deepak Jasani, head of retail research at HDFC Securities.

For instance, Adani Total Gas lost nearly 30,000 retail investors, with its stock dropping 12.2% quarter-on-quarter. Adani Power also saw 48,000 retail investors exit as the stock fell nearly 9%