The domestic stock market staged a strong and impressive comeback on Friday, as benchmark indices surged sharply during intraday trade. This marked a significant rebound, driven primarily by a recovery in most Adani Group shares and positive sentiment across a range of key sectors. The S&P BSE Sensex jumped 1,034.76 points to reach 78,190.55 by 12:42 pm, while the NSE Nifty50 climbed 329.15 points to hit 23,679.05. This dramatic rally added an estimated Rs 5 lakh crore to the Bombay Stock Exchange’s total market capitalization, reflecting a notable revival of investor confidence and optimism in the broader market.
A key factor behind the rally was sectoral strength in banking, financial services, IT, and energy stocks. Heavyweights such as ICICI Bank, State Bank of India (SBI), Reliance Industries (RIL), Infosys, Tata Consultancy Services (TCS), L&T, and Bharti Airtel were at the forefront, providing crucial support and lifting the indices higher. The positive movement in these sectors suggested a broad-based recovery and underscored the resilience of key pillars of the Indian economy.
A standout development was the remarkable recovery in Adani Group stocks, which had experienced sharp declines in previous trading sessions. After undergoing significant losses earlier in the session, Adani shares rebounded strongly. Ambuja Cements led the pack, rising by 6%, while ACC, another key Adani subsidiary, gained nearly 4%. Flagship Adani Enterprises rose 2.5%, and other group stocks like Adani Green Energy, Adani Ports, Adani Power, and Adani Total Gas also saw gains ranging between 1% and 2%. This sudden reversal in the fortunes of Adani Group stocks provided the market with much-needed momentum and helped the broader indices make a strong recovery. However, Adani Energy Solutions remained under pressure, trading 3% lower, indicating that the recovery in the group was still uneven and some entities were facing more significant challenges.
The rebound in Adani Group stocks came after the company issued a strong and unequivocal statement dismissing allegations of bribery and fraud, which had been leveled against chairman Gautam Adani and senior executives. These allegations, raised by the US Securities and Exchange Commission (SEC), pertain to bribery schemes allegedly aimed at advancing the group’s renewable energy projects in India. In response, Adani Group issued a statement labeling these claims as “baseless,” which helped stabilize market sentiment and triggered a wave of buying interest in its stocks, contributing to the broader market recovery.
Despite this recovery, the Adani Group remains under intense scrutiny. On Thursday, shares of Adani Enterprises had plunged to a 52-week low, falling by 23%. Similarly, Adani Energy Solutions and Adani Green Energy saw significant losses, falling by 20% and 19%, respectively. The severe declines on Thursday had raised concerns among investors, and the group’s reputation remained fragile.
Adding to the uncertainty surrounding the group, the Kenyan government recently terminated a $736 million deal with an Adani subsidiary, which involved power transmission lines. The government cited new findings from investigative agencies as the reason behind the termination, raising further concerns about the integrity of the group's international business dealings.
The ongoing allegations against the Adani Group have also drawn attention to the company’s governance practices and its ability to secure funding for its projects. These issues have led rating agencies like S&P and Moody’s to revise their outlooks on select Adani companies, reflecting increased risk perceptions and signaling caution among investors. The downgrade in ratings has put additional pressure on the group and its ability to maintain investor confidence in the long term.
In addition to the internal challenges faced by the Adani Group, the broader economic climate remains somewhat uncertain, especially given the rising inflation and regulatory hurdles that have weighed on corporate performance. The market’s focus on corporate governance and transparency issues has increased, making it imperative for groups like Adani to resolve these concerns quickly to regain full investor confidence.
Despite the sharp rally on Friday, investors remain cautious, and the recovery in the broader market is being carefully monitored. The market's resilience, however, is encouraging, as investors continue to show strong support for sectors such as banking, IT, and energy. These sectors appear to be the primary drivers of the market’s strength, while the Adani Group’s recovery remains a work in progress. Going forward, the market will likely continue to keep a close eye on the ongoing investigations into Adani Group practices, as well as any potential regulatory changes, especially related to governance and financial transparency.
The situation in the stock market underscores a volatile environment, where the recovery in one segment can often be offset by challenges in another. For now, the focus is on how the Adani Group responds to the scrutiny, as well as how the broader economic landscape evolves in the coming months. While Friday's rally was a welcome development, it remains to be seen whether it marks the beginning of a more sustained recovery or if further volatility lies ahead.
