The recent publication of SEBI’s detailed showcause notice of 26 June 2024 to the Hindenburg Report has unmasked a calculated assault on India’s thriving economy. The opposition’s baseless allegations have crumbled under the weight of truth as the Sensex surges to a historic 80,000 points, showcasing the indomitable spirit of India’s growth story. It is time to confront the political machinations behind this attack and set the record straight. The Hindenburg Report was never about financial transparency; it was a sinister plot to derail India’s economic momentum.

The SEBI’s show-cause notice has exposed the dirty tricks of Hindenburg Research and Kingdon Capital Management, who colluded to short-sell Adani Enterprises Limited (AEL) shares using non-public information. The Hindenburg Report contained several baseless allegations, misleading statements, selective disclosures, and was an apparent attempt to incite panic and deflate stock prices, targeting the backbone of India’s economic growth and capital formation through its markets. This orchestrated effort led to a significant drop across 10 listed stocks of the Adani group, wiping out nearly $150 billion from the market within four weeks of the release of the Hindenburg report, a direct hit to investor wealth and market stability.

The panic triggered by the allegations created an atmosphere of uncertainty, deterring investors and stalling the inflow of much-needed capital. During January and February 2023, foreign portfolio investors (FPIs) pulled out nearly ?34,000 crore from Indian equity markets. This exodus of foreign capital directly resulted from the fear-mongering instigated by the Hindenburg report, exacerbated by the opposition’s relentless attacks on the government. It is essential to recognize that foreign investment is a critical driver of growth and employment in India, and such unfounded reports can severely undermine investor confidence. The SEBI’s notice alleges a shocking conspiracy. It says Hindenburg shared an advance copy of its malicious report with New York hedge fund manager Mark Kingdon months before its public release.

This underhanded collaboration also involved a profitsharing agreement. Through nonpublic information, Kingdon capitalized on significant declines in Adani’s market value and made over $22 million gains for Hindenburg and himself through alleged blatant market manipulation and insider trading. The show-cause notice suggests such manipulation underscored their deceit and obliterated any semblance of credibility in their so-called research. Rahul Gandhi and his cohorts wasted no time in hurling accusations of government intervention and corporate cronyism.

They painted a picture of a ‘suit-boot ki sarkar’ catering only to the elites, disregarding the true spirit of economic reform and growth. However, SEBI’s show cause notice has categorically debunked these claims, showing the malicious intent of the Hindenburg report and the lack of a trace of government interference. This revelation underscores the opposition’s penchant for spreading misinformation to destabilise the government and tarnish its image. The Congress party’s role in amplifying the baseless claims of the Hindenburg report cannot be ignored. Instead of standing by the nation and ensuring economic stability, the Congress chose to fan the flames of falsehood, furthering the panic and mistrust among investors. This irresponsible behaviour highlights their disregard for national interest in favour of political opportunism.

The opposition’s actions were not just an attack on a business entity but an assault on India’s economic aspirations. They continued to destabilize the market through their vile rhetoric and baseless allegations. Despite Congress’s attempts to destabilize the government’s economic policies, India’s GDP growth remained robust, growing at 8.2 per cent in FY2024, against 7 per cent in FY 2023 showcasing the resilient Indian economy under the present government. The government’s focus on structural reforms, infrastructure development, digital initiatives and decisive decision-making at the top has played a pivotal role in sustaining this growth trajectory. The real victims of this nefarious scheme were India’s hardworking middle class, whose aspirations of wealth creation through the stock market were jeopardized. SEBI’s show-cause notice lays bare how the Hindenburg report dealt a blow to capital formation, shaking investor confidence and harming the financial prospects of ordinary citizens.

The report by Hindenburg left aspiring investors poorer, with a loss of Rs 11.8 lakh crore in the market value of Indian stocks within days of the report’s release. This malicious attack by Hindenburg was not just on a conglomerate but on the very essence of middle-class ambitions and financial security. The narrative pushed by the opposition failed to acknowledge this severe impact on the commoner, instead choosing to amplify the chaos for political mileage. SEBI’s show-cause notice suggests the Hindenburg report was a well-orchestrated conspiracy to destabilize India’s economy. The opposition’s false narrative of government collusion has been shattered, exposing their deceit and political desperation. As the Sensex reaches unprecedented heights, it is clear that India’s economic resilience and growth potential are unshakeable.

It is time to put aside the distractions and focus on the future, confident that India’s economy remains robust, transparent, and poised for greater heights. The truth has prevailed, and India’s growth story continues unabated. The focus should now be on safeguarding the nation’s economic interests, ensuring that such malicious attempts to derail progress are met with stringent measures and unwavering resolve.

(The writer is Professor of Finance at XLRI Xavier School of Management and a leader of the Bharatiya Janata Party)