While SEBI remained a silent observer, the stock market lost billions of dollars
The Securities and Exchange Board of India (SEBI), which has the primary responsibility to ensuring that the stock market runs smoothly and that investors' money is not stolen by con artists, is the national regulator of the stock market, not the Adani Group or the Hindenburg report. The recent stock market crisis over the past ten days amply demonstrates the regulatory body's failure to carry out its duties with diligence and transparency. It did so while hundreds of thousands of investors saw their investments crash and billions of dollars were lost on the market in the Adani Group shares.
When the top-performing shares of the Adani Group fell, the SEBI frequently failed to even bother to issue a statement reassuring investors that it was in control of the situation and that the market would soon stabilise. It all started after the short seller Hindenburg Research, a US-based short-selling firm, released a 106-page report on the Adani group, calling it the biggest scam in history and alleging that the Adani Group engaged in stock manipulation and skirted Indian laws (which SEBI is supposed to protect) by launching over 40 shell companies operating out of Mauritius and other nations that bought the Adani shares using a “pump and dump” strategy for the stock market.
The investors watched as their life savings were wiped off in a matter of days, but the appointed guardian is reduced to a spectator, as if its hands are shackled and its lips is taped? When this all started, after ten days, SEBI released a press release stating that it would increase surveillance and that it was monitoring developments. However, the market was not persuaded by this statement. The Adani Group, which has lost billions of dollars on the stock market and may have to default on loans from numerous public sector banks, as well as the LIC, which has exposure to the Adani Group worth thousands of crores, are not mentioned.
Even the Adani Group's overvaluation did not cause SEBI to object. It made no effort to acknowledge that the majority of its equities were trading at prices well above their fundamental values and that the majority of the growth had occurred during the epidemic, when the majority of stocks were losing money. It is past time for SEBI to take the initiative and at the very least establish some semblance of order in the stock market; otherwise, there is a serious risk that international investors may lose confidence in the Indian stock market.