Delhi, India: Using its authority under three regulations and norms governing offshore derivative instruments (ODIs) and short-selling, markets regulator Sebi informed the Supreme Court on Monday that it is thoroughly investigating the allegations made by Adani Group companies in the Hindenburg Research report as well as the movement of share prices prior to and following the publication of the report.
"Sebi is already enquiring into both, the allegations made in the Hindenburg report as well as the market activity immediately preceding and after the publication of the report, to identify violations of Sebi regulations," the regulator stated in a note submitted by solicitor general Tushar Mehta to a bench headed by CJI DY Chandrachud.
It stated, "As the matter is in the early stages of examination, it may not be appropriate to list details regarding the ongoing proceedings at this stage."
Sebi stated that the PILs in the SC are on the price fluctuations of shares of a single group of companies, which had "no significant impact at market-wide level or at system-wide level to warrant a system-level review of regulatory frameworks in operation," in support of its principled opposition to the review of the existing market regulatory framework.
"The entity-level issues that have arisen have had a significant impact at the entity level and warrant detailed examination by the regulator," the Sebi stated. "The regulator has already taken action."
It talked about both how short-sellers like Hindenburg operate and how little Adani Group company shares affect stock markets. Despite selling pressure causing significant price declines for Adani shares, the Indian market as a whole has demonstrated complete resilience. Sebi stated, "The Adani group companies have a combined weight of zero on the sensex and less than one percent on the Nifty."
It stated that short-sellers like the US-based Hindenburg conduct research on businesses they believe to have governance or financial issues.