Will Sensex, Nifty Face The Flurry Of Hindenburg's New Report On Sebi, Adani Companies?

Indian stock market is likely to face the heat of US short seller Hindenburg's new claims against market regulator Sebi and billionaire Gautam Adani-backed port-to-power empire. Sensex and Nifty which witnessed a volatile session last week due to global factors amid RBI policy outcomes, is seen to be mongering between this Hindenburg-Sebi-Adani row.

A knee-jerk reaction is seen in Sensex and Nifty by market analysts as big investors may show cautious sentiment, especially in Adani stocks considering the new findings.

Vinit Bolinjkar of Ventura Securities via his LinkedIn post said, "They are gaslighting against Adani because he successfully concluded 3 fund raise in various companies and has been the Indian proxy to build a network of port assets across the globe and China does not like it."

Bolinjkar added, "The attack on the Indian stock market is an act of financial terrorism and should be investigated accordingly."

In its latest report, Hindenburg took a jibe at Sebi chief Madhabi Puri Buch and her husband Dhaval Buch and claimed their involvement as shareholders in Adani Group companies.

Hindenburg report said, "despite the existence of thousands of mainstream, reputable onshore Indian mutual fund products, an industry she now is responsible for regulating, documents show SEBI Chairperson Madhabi Buch and her husband had stakes in a multi-layered offshore fund structure with miniscule assets, traversing known high-risk jurisdictions, overseen by a company with reported ties to the Wirecard scandal, in the same entity run by an Adani director and significantly used by Vinod Adani in the alleged Adani cash siphoning scandal."

Further, coming to Gift Nifty, it ranged between 24,338.5-24,384.5. Currently, trading lower from the previous session. Hence, hinting at a cautious start in Sensex and Nifty 50. Meanwhile, Asian stocks traded in gains with Japanese market closed due to a public holiday. Kospi and ASX/200 were up. Globally, investors will wait for US inflation data scheduled later in the week.

While India will also see a host of economic data this week with CPI and IIP data on August 12, followed by WPI on August 14.

For August 12, Shiju Koothupalakkal - Technical Analyst at Prabhudas Lilladher expects Nifty 50 to have support and resistance around 24200 and respectively, while Bank Nifty is seen at 50000 and 51000 respectively.

Koothupalakkal has recommended three stocks to buy on August 12. These are:

- BUY ASHOK LEY cmp 253.10 Stop Loss 247 Target 265
- BUY MANAPPURAM FINANCE cmp 204.77 Stop Loss 200 Target 215
-BUY MHRIL cmp 434.40 Stop Loss 424 Target 455

Last week, on Friday, Sensex gained by 819.69 points or 1.04% to end at 79,705.91, while Nifty surged by 250.50 points or 1.04% to close at 24,367.50. The benchmark's weekly performance is mixed with Nifty up by 0.6% and Sensex marginally down.

For this week's session, Vinod Nair, Head of Research, Geojit Financial Services said, the inflation is expected to be moderate. Moving forward, the direction of the domestic market will be influenced by global markets. A lack of fresh triggers and subdued earnings will be a deterrent for higher valuation, investors are advised to shift their focus from growth stocks to value stocks.

Nair added, "As expected, RBI kept its policy rate unchanged; however, the overall tone was slightly hawkish, including an expectation of upward revision in CPI, which hints at caution. Further, domestic valuations are not cheap, while Q1 results are painting a moderation in growth. So far, 46 companies in Nifty50 index which have published their results have reported PAT growth of 6.12% YoY, which is marginally better than 5.78% expectation, however the overall it seems moderating compared to previous quarters."

Meanwhile, Krishna Appala, Sr. Research Analyst, Capitalmind Research said, Despite the current global uncertainties, India's growth story remains compelling. Once the dust settles in a few weeks, we anticipate a renewed focus on India's economic potential, which is poised to continue for the next 5-7 years. The recent market correction should not deter investors from the broader long-term growth narrative. Instead, it presents a strategic opportunity to enter the market and invest in fundamentally sound companies at more attractive valuations.

Moreover, Appala added, "in conclusion, while short-term risks may dominate the headlines, they also present an opportunity for savvy investors to build long-term positions. With India's growth trajectory intact, we remain optimistic about the market's prospects in the coming years."

For the overall third quarter of 2024, Alex Volkov, Market Analyst at VT Markets said, looking ahead, the outlook for the third quarter is mixed. With 47 companies issuing negative EPS guidance against 39 positive, the cautious approach of corporate America is clear. However, this conservative stance is not uncommon, and it is often a strategy to manage expectations. The true test will come in Q4 when the accuracy of this guidance can be fully assessed.

Volkov added, the broader economic picture also offers some reassurance. Although some recession indicators have been triggered, other key metrics like household income growth, consumer spending, and business investments remain robust. GDP growth has exceeded expectations, providing a counterbalance to the market's recent volatility.

As we move forward, Volkov said, "traders and investors should remain cautious. The recovery seen at the end of the week is encouraging, but it does not guarantee a smooth ride ahead. The market's reaction to the latest developments has been swift and severe, reflecting the fragile nature of investor sentiment in the current environment."