Indian Fund Managers Continue to Trim Holdings in Adani Group Stocks

Indian fund managers have continued to reduce their holdings in Adani Group stocks, suggesting that concerns about governance within the conglomerate remain despite a rebound in its market value. As of March 2023, investments by local equity mutual funds in the group accounted for just 0.9% of the industry’s $182 billion in assets, down from nearly 2% at the end of December 2022.

While some fund managers such as Mirae Asset Investment Managers Pvt. and HSBC Asset Management India Pvt.

Were buyers of Adani Group stocks in March, the shares purchased by them in two group entities totaled less than 700,000. The continued caution of local fund managers contrasts with the optimism shown by GQG Partners’ star investor Rajiv Jain, who spent nearly $2 billion on stakes in four Adani Group stocks in early March, triggering a rebound of over $30 billion in the conglomerate’s market value.

Adani Group’s Market Value Eroded by Scathing Report

Adani Group saw $153 billion wiped off its market value in the aftermath of Hindenburg Research’s scathing report in January 2023. The group has denied the allegations made by the short-seller and has since scaled back its capital spending for growth. The conglomerate has also announced that its founders have repaid share-backed loans.

Local Fund Managers More Cautious Than Overseas and Individual Investors

Bloomberg Intelligence conducted a historical analysis in 2021, which showed that local fund managers tend to have smaller holdings in companies that report governance issues than overseas and individual investors. This trend appears to be continuing, with Indian fund managers continuing to trim their holdings in Adani Group stocks despite the rebound in its market value.

Conclusion

The reduction in holdings of Adani Group stocks by Indian fund managers suggests that concerns about governance within the conglomerate persist. While some fund managers have purchased Adani Group shares recently, the overall trend is towards reduced exposure. The caution of local fund managers contrasts with the optimism shown by overseas and individual investors, as well as GQG Partners’ star investor Rajiv Jain. It remains to be seen whether Indian fund managers will increase their holdings in Adani Group stocks in the future or whether concerns about governance will persist.