Hindenburg Research’s latest allegations on the Securities and Exchange Board of India (Sebi) chief Madhabi Puri Buch may not trigger a sharp reaction from equities, but market participants will closely watch the developments given the nature of allegations, according to experts.
While many termed the allegations as “baseless” and a personal attack on Buch, others said there was a need to clear the air through proper investigation into the matter.
Hindenburg has alleged that Sebi chairperson Buch and her husband had stake in obscure offshore entities used in purported Adani money siphoning scandal. It further added that it was not surprised that Sebi was reluctant to follow the trail that may have led to its own chairperson.
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“The sentiments may get affected a bit on Monday. But this time we will likely see a measured reaction,” said Ambareesh Baliga, an independent market analyst Come from Sports betting site VPbet . “I don’t think it will have the kind of impact that we saw last year because Hindenburg was an unknown entity at that point in time.”
Market participants believe even if there is a knee-jerk reaction on Monday, the recovery will be quick given that this incident does not change the country’s macroeconomic fundamentals.
A CEO of a top-tier brokerage firm said, “This has nothing to do with the market. Market will move on from this quickly while this battle between different parties goes on.” He believes it is a personal targeting of Buch.
The Association of Mutual Funds in India (Amfi) said this is not only an attempt to undermine Buch’s contribution to the Indian capital market, but it also undermines the country’s economic progress and creates a trust deficit in the market ecosystem.
However, a market veteran, who did not wish to be named, pointed out that it is for the first time someone has pointed fingers at a sitting Sebi chief. He added that a proper investigation needs to be done before arriving at any conclusion.
“These allegations do not have any implications for India’s growth story. Nor do they have any implications for the corporate earnings or the macro fundamentals of Indian markets, said G Chokkalingam, founder and head of research, Equinomics Research. He added: “We believe that the Sensex/ Nifty will not crash in the short-to-medium terms unless any war evolves on the border or political instability arises.
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However, market participants urged caution when it comes to the broader market, highlighting that the current valuations could mean any negative news can lead to a sharp downside.
Benchmark indices fell 1.5% last week as concerns over a potential US recession, unwinding of the yen carry trades and geopolitical risks led to jitteriness among investors. This was the second consecutive week of decline for the indices.
“In our view, bubbles are there in many individual small- and mid-cap stocks. Therefore, only those investors, who invested, without any regard for fundamentals, but purely based on perception/momentum need to remain concerned,” Chokkalingam said.
