More Indian firms on US short-sellers' target? What they can do
Hindenburg Research's second attack on the Adani Group in which it targeted Sebi chairperson Madhabi Puri Buch has failed to make much impact on the markets. Hindenburg has claimed that she and her husband had stakes in offshore entities linked to the Adani family. Unlike its first report against the Adani Group in January last year, this one has failed to have intended impact so far. Adani stocks did not suffer the kind of rout they did in the wake of last year's report. Analysts have dismissed the report as «sensationalism» and say that it will not have much impact on stock prices.«It appears that this “revelation” is unlikely to impact the market meaningfully. The buy on-dips strategy which has been working well in this bull run is likely to work again,» said Dr. V K Vijayakumar of Geojit Financial Services.
However, Hindenburg has doubled down on its claims and responded to Sebi chief's statement that accused the short-seller of attempting a «character assassination».
Even though Indian markets as well as analysts have discounted the latest Hindenburg report and the short-seller has itself come under fire after Sebi's show-cause notice to it in June, short-seller attacks constitute a high risk for Indian companies.
Short selling involves borrowing a stock to sell it in the expectation the price will fall, then repurchasing the shares and pocketing the difference. Thus, short-sellers make money from stocks of companies, which are facing problems, going down. But sometimes they try to put a company in trouble
