Stock Infographics

India bubble starting to burst

Publish date: Fri, 03 Feb 2023, 12:13 PM
Visual content on financial market and investment trends

Recently, Adani Enterprise, India's largest conglomerate made headlines due to its skyrocketing share price. The sudden increase in value was attributed to the changing geopolitical landscape and investors flocked to the stock in droves. However, it seems that the excitement was short-lived, as the share price has now plummeted due to overvaluation and the company's stance on a highly contentious issue.

The initial surge in the company's share price was driven by positive developments in the geopolitical arena, which created a favourable environment for the company's operations. Investors were optimistic about the company's future prospects and rushed to buy shares, driving the price higher.

However, it soon became clear that India was standing on the opposite side of the US and its allies. A few days back, short-seller Hindenburg Research disclosed short positions in Adani Group, citing potential stock manipulation and accounting fraud.

Compounded by the country's controversial stance on a Russia issue, potential manipulation, accounting fraud, and sky-high valuation, investors began to sell their shares, leading to a sharp decline in the company's stock price.

Yesterday Credit Suisse Group stopped accepting bonds from the Adani group of companies as collateral for margin loans to its private banking clients.

The situation was exacerbated by negative media coverage, which further eroded investor confidence in the company.

I think India's capital market bubble is starting to burst.


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