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Adani stocks rebound: Adani Enterprises, Ports surge 4-5% after selloff

Stocks
2 min Read Nov 25, 2024
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Shares of Adani Group companies continued to bounce back on November 25, recouping some losses after a sharp selloff earlier in the week. Stocks like Adani Enterprises and Adani Ports & Special Economic Zone led the rally, surging 4% and 5%, respectively, before retreating from their intraday highs. 

Other entities, such as Adani Power, Adani Green Energy, and Adani Wilmar, also rose 3–6%, supported by buying at lower levels.

Sharp selloff raises governance concerns

This recovery follows a turbulent session on November 21, during which Adani Group stocks lost a staggering ₹2.2 lakh crore in market value. Adani Enterprises plummeted 23%, while Adani Green Energy and Adani Energy Solutions fell 20% each. These sharp declines stemmed from allegations by US prosecutors accusing Gautam Adani and his executives of orchestrating a $250 million bribery scheme to secure solar contracts in India. The allegations intensified concerns about the group’s governance and financial stability, leading to significant investor unease.

Adding to the challenges, S&P Global Ratings downgraded its outlook for three Adani entities—Adani Electricity Mumbai Ltd, Adani Ports & SEZ, and Adani Green Energy Restricted Group 2—to negative. While the ratings were affirmed, the agency warned of potential cash flow impacts if the allegations are proven or if funding costs rise. The warning comes amid fears that banks and bond investors may limit their exposure, jeopardising the group’s ability to refinance or fund future growth.

Should you invest in stocks amid the uncertainty?

For those looking to invest in stocks, the Adani Group’s recent performance highlights the risks and rewards of equity investments. The recovery showcases resilience, but the lingering allegations underscore the importance of due diligence. Investors should assess not only potential returns but also governance issues and external factors that might impact performance. A diversified approach when you invest in stocks can help mitigate sector-specific risks.

Key takeaways

  • Recovery signs: Adani Enterprises and Adani Ports surged 4–5%, supported by value buying. Other stocks saw gains of up to 6%.

  • Underlying risks: Allegations of bribery and a negative ratings outlook pose ongoing concerns for the conglomerate.

Investor insight: Before you invest in stocks like Adani, consider broader market trends, governance stability, and diversification strategies.