A dozen companies, including foreign portfolio investors and foreign institutional investors in tax havens, were the top beneficiaries from short selling in shares of Adani Group companies, The Indian Express has reported citing an Enforcement Directorate probe into the Hindenburg report that led to a market crash in January.
Short-selling refers to the investing technique where securities are borrowed to sell and later bought back when the price dips. In this model, investors bet on and make profits from a fall in share prices.
The Enforcement Directorate had shared its findings with markets regulator Securities and Exchange Board of India (SEBI) in July, according to the Indian Express.
None of the short sellers, which included three from India and four from Mauritius, had disclosed their ownership structures to income tax authorities, the report cited sources as saying.
Some of these companies had allegedly opened positions two to three days before the Hindenburg report was published on January 24, the report said. Some others were dabbling in short trades for the first time.
Foreign investors that registered with SEBI are allowed to trade in derivatives, the financial instruments that allow short-term trades by offsetting market risks.
The report also pointed to irregular earning patterns of some of these short sellers. The SEBI had passed an order against the promoter of one of the Indian firms for misleading investors, it said.
Hindenburg had alleged that industrialist Gautam Adani used shell companies in Mauritius to manipulate stock prices of Adani Group firms. The Adani Group has denied all charges and called its report a "calculated attack" on India, its institutions and growth story.
The Supreme Court had asked SEBI to investigate the case and submit a report.
A panel of experts appointed by the Supreme Court had earlier submitted there was no price manipulation on the part of Adani Group and that the conglomerate had taken necessary steps to comfort retail investors.
(Disclaimer: New Delhi Television is a subsidiary of AMG Media Networks Limited, an Adani Group Company.)
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