Bengaluru: Indian shares sank more than 1% on Wednesday, dragged down by Adani group stocks after a short-seller raised fresh concerns about the group's debt in a report that had a ripple effect across the market.
The Nifty 50 index was down 1.15% at 17,911.55 as of 12:05 p.m. IST, while the S&P BSE Sensex fell 1.12% to 60,295.55.
Stocks of the seven listed Adani group companies fell between 3% and 7% after Hindenburg, a well-known U.S. short-seller, said key listed companies in the group controlled by billionaire Gautam Adani had "substantial debt", which has put the entire group on a "precarious financial footing".
The flagship Adani Enterprises fell about 3%, while Adani Ports and Special Economic Zone sank more than 6%. Both were among the top three losers on the benchmark Nifty index.
Adani-owned cement firms ACC and Ambuja Cements fell 6.2% and 6.9%, respectively.
All the major sectoral indexes logged losses, with the heavyweight financials sliding nearly 2%.
Analysts said that risk aversion due to the Hindenburg report led to the drop in banking stocks.
"The slide in today's equities is due to a combination of factors such as the report on Adani group stocks, monthly expiry of January derivatives series as well as the fading off of the pre-budget rally," said Avinash Gorakshakar, head of research at Profitmart Securities.
Indian markets will be shut for a local holiday on Thursday, meaning January series derivatives expiry will be on Wednesday.
"The weakness in the domestic equities will persist on high valuations and weak global cues," added Gorakshakar. He said the markets would be volatile until the union budget on Feb. 1.
Auto stocks were among the few bright spots. Maruti Suzuki and Bajaj Auto logging gains of 0.8% and 1.3%, respectively, after Maruti's earnings report.