The collapse of the Gautam Adani-led Adani Group has captured the public’s attention and caused market volatility with a sharp drop in the market capitalization of all group companies. This has caused concern over the preferred mutual funds of ordinary investors’ growing exposure to Adani Group stocks.
Mutual Funds that have invested in Adani Stocks!
According to Value Research research, as of December 2022, 406 mutual fund schemes operated by 32 asset management organizations had exposure to the group companies. Through mutual funds, about 3 crore investors invest their hard-earned money in the stock market.
The Nifty 50 index includes Adani Enterprises, Adani Ports & SEZ, and Adani Transmission; the Nifty Next 50 index includes Adani Green Energy and Adani Transmission. In terms of absolute exposure, SBI Mutual Fund has the greatest exposure to the Adani Group companies at ₹4,748 crores, followed by UTI MF at ₹1,868 crores and Kotak Mahindra MF at ₹1,593 crores. The leading mutual fund house is SBI MF, according to data from the Association of Mutual Funds in India, with assets of 7.12 lakh crore as of December 2022.
Since the Hindenburg report’s publication on January 24, which included allegations of stock manipulation, accounting fraud, and significant debt, among other things, all nine of the Adani Group’s equities have been trading in the deep red. Concerns had been raised by the research over the group’s capacity to repay loans, the vulnerability of Indian banks, as well as the state-run insurer Life Insurance Corporation of India’s stake in Adani Group firms.
Market sentiment was negatively affected by the company’s decision to cancel its 20,000 crore follow-on public offering. In reality, the stock market NSE has added short-term additional surveillance measures to Adani Enterprises, Adani Ports and SEZ, and Ambuja Cements as of today. The market has been moving in opposite directions since the Adani crisis first surfaced: Adani stock prices have fallen, while the rest of the market has remained stable.
Because of worries that the crisis would affect banks, the banking industry also felt pressure, but it has since recovered. It’s unlikely that the crisis would put the Indian banking system in any systemic danger. According to V. K. Vijayakumar, chief investment strategist at Geojit Financial Services, the Adani crisis’ effect on the market “seems to be gradually waning.”