What is a rumour? Oxford defines it as ‘a currently circulating story or report of uncertain or doubtful truth’.
So, what has an uncertain or doubtful truth got to do with the biggest business empire of Gujarat! Well, at least on Tuesday, it caused havoc for the Adani Group with shares of all its three companies taking a beating after rumour of arrest of its chairman Gautam Adani.
On Tuesday afternoon, rumour of Adani’s arrest in the missing state NCP leader Jayanti Gohil case caused panic among the among stock brokers across country. This resulted in crash in stock prices of Adani Enterprises, Adani Ports & SEZ and Adani Power. Impact of the slide left Adani Enterprises at a five-year low on bourses.
A stock market expert from Vadodara Anirudh Sethi on his blog www.anirudhsethireport.com flashed the information, ‘Believe it or not: Our Ahmedabad Bookie says: Mr. GAUTAM ADANI is been arrested? What will happen to ADANI STOCKS? Something related to Kidnapping of Congress Leader…We are Hearing (Rumours or Facts??) Let’s see…’.
After the write up was flashed on the blog at 14.59pm, it spread like a wildfire among brokers. However, later in the evening the information on the blog was removed, but the damage had been done.
Notwithstanding the fact that blog was incorrect, the stock market which is usually in love with gossipy or negative news, saw a mad rush. Before anyone could ascertain the veracity of the information, the share prices of the group companies hit the bottom in just half an hour.
“Before markets closed, we got the message on the internal chat room of brokers that Gautam Adani has been arrested in a case of kidnapping of a political leader. Suddenly, we saw profit-booking in the group’s stocks and price started going south,” said a broker of a Mumbai-based stock broking agency.
On single day, Adani Enterprises was crashed by 8.43% or Rs17.90 and closed at Rs194.55 per share by the markets closed on Tuesday. For first time since 2008, the stock price of Adani Enterprises has fallen below Rs200 level.
Due to huge crash in the stock price of flagship company, the market capitalisation of Adani Enterprises has fallen to Rs22,478 crore. For the first time in last two to three years, the market capitalisation of Adani Ports & SEZ is higher than of Adani Enterprises. The stock price of Adani Ports & SEZ was down by 2% or Rs2.25, and closed at Rs113.35 per share with market capitalisation of Rs22,708 crore.
Even the stock price of Adani Power was down by 5% or Rs2.40 and closed at Rs46.35 per share, near to its 52-week low of Rs44.15. The market capitalisation of Adani Power was Rs10,104 crore when the market closed on Tuesday.
“Apart from this rumour, there is news that results of first quarter of 2012-13 of Adani Enterprises are not encouraging. Due to rise in commodity prices, the currency had remained depreciated and it is believed that the working capital of the company is blocked in real estate. Hence, the trading margins of Adani Enterprises have shrunk. It will further reduce the net profit of the company,” said MD & CEO of Dhanvarsha Fincap Pvt Ltd, Nilesh Kotak.
In a statement, the group said that it strongly denies all rumours regarding the arrest of chairman Gautam Adani, which have been specifically spread with malafide intention to harm the reputation of Adani and the Adani Group.
The group will initiate legal action against certain persons who have spread this rumour with malafide intention.