Adani row: Indian PM ignores the opposition's allegations

Indian Prime Minister Narendra Modi ignored the Adani row completely in his reply to the motion of thanks on the President's address in parliament on Wednesday.

That despite repeated disruptions from opposition lawmakers' allegations of his close ties with billionaire Gautam Adani.

Over the past few days, the Adani group's stock plunge has sparked protests and arrests, with opposition lawmakers demanding the Prime Minister respond to what they call India's question - why is the government silent on Adani empire's stocks rout and Hindenburg's allegations?

The opposition's questions also concerned the contagion risks from the sharp plunge in Adani firms' share value, especially on the risk to Indian banks and the government-led Life Insurance Corporation's exposure to Adani.

The Indian empire has lost over $110 billion in market value in two weeks since a U.S. short-sellers critical report was published on January 24th.

Concerns about Adani group companies have been raised in various quarters, including lenders' exposure.

But Reserve Bank of India Governor Shaktikanta Das on Wednesday dismissed any risks from Adani on the Indian Banking System.

Das said the strength, size and resilience of the Indian banking system now are much stronger and larger "to be affected by a case like this" about the developments at Adani group.

Since Tuesday, Adani shares have recovered and stalled an eight-day plunge.

The resurgence in Adani group's shares continued on Wednesday after solid earnings releases from the group's firms and the empire's decision to prepay loans totaling over $1.1 billion boosted investor confidence.

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In the latest earnings release, Adani Wilmar reported a 16 per cent increase in quarterly profit on higher demand for its cooking oil and packaged foods and said Hindenburg Research's report had no bearing on its operations.

Shares of the group's flagship firm, Adani Enterprises, surged nearly 20 per cent, and Adani Ports and SEZ stocks jumped over 8 per cent.

Adani Power, Adani Transmission, and Adani Wilmar stocks rose 5 per cent on Wednesday. Only two of Adani's listed firms' shares continued their fall.

The group's move to prepay loans restored confidence after some banks stopped accepting Adani's securities as collateral in client trades.

Standard Chartered, Citi and Credit Suisse had assigned zero value to Adani assets as collateral against marginal loans.

Adani Ports is also considering repaying $605 million of loans to release pledged shares and lower capital expenditure by roughly half next year.

That comes after the group on Monday denied media reports that the empire is planning to cut capital expenditure.

Is it a turning point in the Adani vs Hindenburg row?

There is some respite currently, but sustained recovery in Adani stocks is needed to boost investor confidence in the long run.

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