Hindenburg’s Fresh Salvo: SEBI Chief in the Crosshairs | Weekly Update August 16th

Hello Readers! 

We hope you’re having a better week than our very own SEBI’s chief! Just when it seemed like the Hindenburg gossip was dying down, fresh speculations emerged. So, let’s get into the juicy bits, right after we look at the week that was. 

🧾In this Article 

Weekly Market Wrap-up 

Quick bites 

Stocks in News 

IPO corner 

Cover story: Hindenburg’s Fresh Salvo: SEBI Chief in the Crosshairs 

Key events 

📈 Weekly Market Wrap-up 

Indian benchmark indices rallied strongly this week, snapping a two-week losing streak. The Sensex and Nifty climbed significantly, driven by gains in financial and IT stocks. Both indices closed at their highest levels since August 2. The broader market also participated in the upmove, with only three out of the Nifty 50 stocks ending in the red. 

The Sensex ended the week at 80,436.84, up 730.93 points, while the Nifty closed at 24,541.15, up 173.65 points. 

Sector Spotlight

Tech leads the charge, while others stumble – the market witnessed a mixed performance this week. The IT sector continued its upward trajectory, surging 4.27% as global tech optimism persisted. FMCG stocks, while in positive territory, showed modest gains of 0.18%. On the other hand, the consumer durables sector faced a rough patch, shedding 3.9%. Healthcare and capital goods sectors displayed resilience, closing with gains of 10.21% and 0.44%, respectively. 

Nifty 100 Top gainers  

• Tech Mahindra: ₹1585.1 (+5.21%) 

• Wipro: ₹516.4 (+5.11%) 

• Infosys: ₹1859.35 (+5%) 

• HCL Technologies: ₹1669.05 (+4.94%) 

• Havells India: ₹1876.5 (+4.6%) 

 Nifty 100 Top losers 

• Zydus Lifesci.: ₹1187.55 (-8.71%) 

• Life Insurance: ₹1057.8 (-6.69%) 

• Varun Beverages: ₹1422.35 (-5.74%) 

• Divi’s Lab.: ₹4636.8 (-4%) 

• United Spirits: ₹1406.3 (-3.34%) 

FII and DII Activity

Foreign Institutional Investors (FIIs) turned net sellers of Indian stocks last week, offloading  ₹10,149.47 crores worth of equities. Conversely, Domestic Institutional Investors (DIIs) displayed optimism, turning net buyers of Indian stocks worth ₹10,560.08 crores. DII buying outweighed FII selling, providing some support to the market. 

Global Gossip

Global stock markets saw a mix of results this week. In Asia, Hong Kong’s Hang Seng Index climbed 1.99%, Taiwan’s Weighted Index surged 4.10%, and Indonesia’s Jakarta Composite gained 2.41%. South Korea’s KOSPI also saw a strong rise of 4.20%. However, China’s Shanghai Composite climbed 0.60%. Across the Atlantic, US markets performed strongly to recover from last week’s sharp pullback, with the S&P 500 up over 6.5% from the August 5 lows, and the technology-heavy Nasdaq up over 8%. Better than expected inflation numbers helped US stocks, with headline CPI inflation now at its lowest for the year. The Headline PPI inflation for July stood at 2.2% annually, below forecasts of 2.3%, while headline CPI inflation came in at 2.9%, also below expectations of 3.0%.

The Nasdaq Composite soared by a significant 5.29%, while the Dow Jones Industrial Average climbed 2.94%. In Europe, Germany’s DAX jumped 3.38%, and France’s CAC increased by 2.48%. 

Rupee Report

The Indian rupee displayed remarkable stability against the US dollar this week. Closing at 83.95, the rupee exhibited a negligible change of -0.0025 compared to the previous week. 

This near-zero percentage change suggests a balanced market sentiment for the rupee. While factors such as global crude oil prices and foreign portfolio investments can influence the rupee’s value, it seems to have weathered the week without major fluctuations. 

Gold Holds: 

Gold prices experienced a significant uptick this week, closing at a robust 71,375 rupees per 10 grams. This represents a substantial increase of 1,480 rupees from the previous week’s closing price. The 2.12% surge in value indicates strong bullish sentiment in the gold market. It could be that investors are flocking towards gold as a safe haven asset, possibly due to concerns about global economic uncertainties or inflationary pressures.

🍟 Quick Bites 

🚆 Cabinet approves 8 new railway projects worth Rs 24,657 crore. 

📉 UK unemployment falls to 4.2% but wage growth slows. 

📊 US core-PPI cools to 2.4% in July. 

🚗 Ola rebrands as Ola Consumer, expanding beyond ride-hailing. 

📞 MTNL and BSNL sign a 10-year service agreement. 

🍟 Mars to acquire Pringles maker Kellanova for $35.9 billion. 

📈 India’s textile and apparel exports rise 4.73% in July. 

🔽 India’s wholesale inflation eases to 2.04% in July. 

📉 India’s trade deficit widens to $23.5 billion in July. 

🚗 Passenger vehicle sales mixed in India in July. 

⚖️ Supreme Court revives insolvency case against Byju’s. 

📈 UK inflation climbs to 2.2% in July. 

🔽 US inflation continues to decline, reaching 2.9% in July. 

 🔎 Stocks in news 

⚒️ Coal India allows power units to buy coal beyond annual contracts. 

📜 LTIMindtree receives ₹62.4 crore GST notice. 

📉 Vedanta approves sale of 2.6% stake in Hindustan Zinc via offer-for-sale. 

📉 India’s inflation rate falls to 3.54% in July. 

📈 India’s industrial production grows 4.2% year-on-year in June. 

💰 Monthly SIP contribution hits record high of ₹23,332 crore in July. 

🚆 Cabinet approves 8 new railway projects worth ₹24,657 crore. 

📊 Financial services top funds raised in FY24, followed by capital goods and healthcare. 

📉 Bajaj Finserv gets ₹342 crore GST notice from Kochi. 

🏠 Godrej Properties acquires 90-acre land in Khalapur for residential project. 

🏆 NBCC wins ₹710 crore order from Jhansi Development Authority. 

💼 Vedanta to sell up to 3.31% stake in Hindustan Zinc at ₹486 per share. 

🏍️ Mahindra launches BSA Gold Star 650 motorcycle in India. 

📅 Hindustan Zinc sets dates for offer-for-sale of 3.17% stake. 

📦 NBCC subsidiary wins ₹528.21 crore procurement order. 

📈 1QFY25 key results this week 

📈 Hindalco’s net profit up 25.26% YoY to ₹3,074 crore in Q1 FY24. 

📊 Samvardhana Motherson’s net profit up 65.46% QoQ to ₹994.17 crore. 

💹 Muthoot Finance’s net profit up 13.89% QoQ to ₹1,164.03 crore. 

🚆 IRCTC’s net profit up 32.51% YoY to ₹307.72 crore. 

📈 IRFC’s net profit up 1.65% YoY to ₹1,576.83 crore in Q1 FY24. 

📉 Vodafone-Idea’s net loss down 17.45% QoQ to ₹6,471.3 crore. 

💰 HUDCO’s net profit up 25.14% YoY to ₹557.75 crore. 

⚡ Voltas’ net profit up 158.51% YoY to ₹334.23 crore. 

🚢 Mazagon Dock Shipbuilders’ net profit up 121.45% YoY to ₹696.10 crore. 

🔋 Ola Electric’s net loss up 29.96% QoQ to ₹347 crore. 

✈️ HAL’s net profit up 76.50% YoY to ₹1,437.16 crore in Q1 FY24. 

♻️ Sustainability Corner 

🌞 REC forms new subsidiary for Rajasthan’s renewable energy zone. 

🔋 Ola Electric launches e-motorcycle series ‘Roadster’ starting at ₹75,000. 

 🚀 IPO corner 

Upcoming SME IPOs: 

• Orient Technologies Limited IPO (21-23 August 2024) 

• Brace Port Logistics Limited IPO (19-21 August 2024) 

• Forcas Studio Limited IPO (19-21 August 2024) 

• Interarch Building Products Limited IPO (19-21 August 2024) 

 Subscription status: 

• Saraswati Saree Depot IPO subscribed 107.52 times on Day 3.  

News: 

• Smartworks Coworking Spaces to raise ₹550 crore via IPO. The company has filed draft papers with SEBI, seeking funds for expansion and debt repayment. 

• SoftBank’s portfolio firms deliver strong IPO debuts. Ola Electric and Unicommerce shares up over 60% and 40% respectively, while Delhivery gains over 20%. 

Hindenburg’s Fresh Salvo: SEBI Chief in the Crosshairs 

Hindenburg Research has emerged as a formidable force in corporate India, its allegations often sending shockwaves through the financial markets. The firm first gained notoriety with its damning report on the Adani Group, accusing the conglomerate of stock manipulation, accounting fraud, and insider trading. These allegations triggered a massive sell-off in Adani Group stocks, raising serious questions about corporate governance and regulatory oversight in India. Here’s a quick overview of the matter. 

Key Findings and Implications 

SEBI’s final report, released in March 2023, found evidence of violations by the Adani Group. The regulator imposed penalties totaling &1850 crore for manipulative trading practices, non-disclosure of related-party transactions, and other irregularities. While this action was seen as a step in the right direction, critics argued that the penalties were inadequate considering the scale of the alleged fraud. 

The report also highlighted the role of certain foreign portfolio investors (FP|s) with links to the Adani family. These FPls were accused of artificially inflating stock prices. SEBI’s investigation into these entities is ongoing. 

The repercussions of the Hindenburg-Adani saga extend far beyond financial losses. The crisis eroded investor confidence, damaged India’s reputation as a global investment destination, and sparked a broader debate about corporate governance and regulatory oversight. 

SEBI in the Crosshairs 

In a dramatic escalation, Hindenburg has now turned its attention to the Securities and Exchange Board of India (SEBI), the country’s market regulator. The short-seller alleges that SEBI’s chairperson, Madhabi Puri Buch, has undisclosed links to offshore entities connected to the Adani Group. These claims, if substantiated, could have far-reaching implications for the regulator’s credibility and independence. 

Potential Fallout 

The allegations against SEBI’s chief have ignited a firestorm of controversy. If proven true, they could erode public trust in the regulator, a body entrusted with safeguarding investor interests. Moreover, it could reignite concerns about the broader issue of corporate governance and regulatory capture in India. 

The Road Ahead 

The government and SEBI have vehemently denied Hindenburg’s allegations, labeling them as baseless and malicious. However, the matter is far from over. A thorough and impartial investigation is imperative to clear the air and restore public confidence. 

The coming weeks will be crucial in determining the veracity of Hindenburg’s claims. The outcome of this saga will have a profound impact on India’s financial landscape and its standing as a global investment destination. 

Conclusion 

The Hindenburg-SEBI standoff is a high-stakes battle that has captured the nation’s attention. The allegations, if proven, could have serious repercussions for India’s financial ecosystem. As the drama unfolds, it is essential to maintain a balanced perspective and allow the due process to take its course. 

For investors, this period of uncertainty underscores the importance of diligent research and due diligence. While it is tempting to react emotionally to market fluctuations, it’s crucial to base investment decisions on sound analysis and long-term perspectives. Diversification across asset classes can also help mitigate risks during such turbulent times. 

Ultimately, the strength and resilience of the Indian market will depend on the effective functioning of its regulatory bodies. Transparency, accountability, and investor protection should remain the paramount principles. 

Upcoming key financial events for the week: 

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