Hindenburg report: Why India’s market regulator Sebi is in the eye of a storm

India’s stock market has been a hot topic of conversation for the past couple of days, with hashtags around it trending on social media.

The reason isn’t just investor interest, but has more to do with its regulator. Let’s break it down a bit.

It all started over the weekend when US-based activist-investor Hindenburg Research posted on X (formerly Twitter) that “something big” was coming.

Hours later, it released a report accusing Madhabi Puri Buch – the chief of market regulator Securities and Exchange Board of India (Sebi) – of having links with offshore funds used by the controversial Adani group. Both Ms Buch and the Adanis have denied wrongdoing.

Now, Hindenburg had last year accused the Adani group – founded by Indian billionaire Gautam Adani – of decades of “brazen” stock manipulation and accounting fraud.

The group – which has 10 publicly traded companies, operating across a wide range of sectors, including commodities trading, airports, utilities, ports and renewable energy – had strongly denied the allegations.

But the controversy took billions off its market value – it has since mostly recovered – and Sebi is still investigating the allegations.

Hindenburg now say that Ms Buch’s links with the funds used by the Adanis have impacted the regulator’s investigation.

Ms Buch has denied any conflict of interest and said that the investment was made before she was associated with the regulator. Also, there is no direct evidence so far linking her investment in the funds with Adani Group stocks or Sebi’s investigation.

The fresh allegations wiped off $2.43bn (£1.9bn) off Adani Group’s market value at the end of trading on Monday, though it made a substantial recovery from losses earlier in the day.