Gautam Adani Bribery Case: PSU Stocks Like SBI, BoB, LIC & Others Tumble Upto 8% Amid Fresh Allegations

Public sector banks (PSBs) faced a severe sell-off on Thursday, with some stocks losing as much as 7% in value. The Nifty PSU Bank index plummeted nearly 5%, dragged down by heavyweights such as the State Bank of India (SBI), Bank of Baroda, Punjab National Bank (PNB), and Canara Bank. The market reaction underscores broader investor concerns fueled by global and domestic developments.

Shares of SBI dropped 5% to Rs 761.55, Canara Bank fell 5.4% to Rs 92.52, and PNB lost 6% to Rs 94.81 on the NSE. Meanwhile, Bank of Baroda took the biggest hit, tumbling 8% to Rs 219.85. This sharp decline made it the worst performer within the Nifty PSU Bank index.

The sell-off in PSU banks coincided with a broader market downturn. The BSE Sensex slipped 404 points (0.52%) to 77,173, while the Nifty50 fell 154 points (0.66%) to trade at 23,364 by 9:19 a.m. The bearish sentiment was largely triggered by fresh allegations against the Adani Group in the United States, with significant implications for Indian markets.

US prosecutors have accused Gautam Adani, chairman of the Adani Group, and seven others-including his nephew, Sagar Adani-of participating in a multibillion-dollar bribery and fraud scheme. The charges allege that the group paid $265 million in bribes to Indian government officials to secure lucrative contracts. These contracts, aimed at building India's largest solar power plant, were expected to generate $2 billion in profits over 20 years.

Following these allegations, Adani Group stocks experienced a steep decline. The group's dollar bond prices also plummeted in early Asian trading on Thursday, adding to the financial turmoil.

PSBs Face Exposure Risks
The fallout from the Adani indictment has reignited concerns over Indian banks' exposure to the conglomerate. Several banks, including SBI, Axis Bank, ICICI Bank, PNB, and others, have financial ties with the Adani Group.

In January 2023, disclosures following the Hindenburg report revealed substantial exposure by Indian banks and institutions to the group. Life Insurance Corporation (LIC) had an exposure of Rs 35,920 crore, comprising Rs 30,130 crore in equity and Rs 5,790 crore in debt. SBI, India's largest lender, reported a total exposure of approximately Rs 27,000 crore, while Axis Bank disclosed Rs 9,220 crore in exposure. Other significant exposures included Rs 7,000 crore each by PNB and REC Limited, Rs 5,380 crore by Bank of Baroda, and Rs 4,150 crore by IndusInd Bank.

On Thursday, shares of major public sector banks such as Bank of India, Central Bank of India, Union Bank of India, and REC Limited fell by 4-8%. In contrast, private sector banks, though not immune, fared comparatively better. Among Nifty Bank stocks, the top five losers were Bank of Baroda, PNB, Canara Bank, SBI, and IDFC First Bank.

Adding to market pressure, the Indian Rupee hit an all-time low of 84.46 against the US Dollar in early trading on Thursday. The decline was driven by likely foreign outflows from local equities and renewed Dollar strength as global investors tempered expectations of aggressive rate cuts by the US Federal Reserve. The Rupee's depreciation reflects broader macroeconomic concerns, including high interest rates in the US, which have boosted the Dollar.

The confluence of factors-PSU bank stock declines, Adani Group allegations, and rupee weakness-has created a challenging environment for Indian markets. The Nifty PSU Bank index's nearly 5% fall highlights investor apprehensions, particularly regarding banks with significant exposure to the Adani Group.

Market experts suggest that these developments could lead to heightened volatility in the short term. While PSU banks bear the brunt of the sell-off, the ripples from the Adani indictment are likely to affect broader investor sentiment across sectors.

As the Adani Group case unfolds, its implications for Indian banks and the financial system will be watched. For PSU banks, rebuilding investor confidence will require transparent disclosures and robust risk management strategies.