The Nifty 50 index was down 232.85 points, or 1.29% at 17,885.45.

Hindenburg, an US-based investment research firm that specializes in activist short-selling, made wide-ranging allegations of corporate malpractice following a two-year investigation into the Adani group companies.

"We hold short positions in Adani Group Companies through U.S.-traded bonds and non-Indian-traded derivatives, along with other non-Indian-traded reference securities," Hindenburg disclosed in its research report published on 24 January 2023.

Hindenburg said its research involved speaking with dozens of individuals, including former executives of Adani, reviewing thousands of documents, and conducting diligence site visits in almost half a dozen countries.

The Adani Group's seven key listed companies have 85% downside purely on a fundamental basis, owing to sky-high valuations, the report said.

Key listed Adani co's have also taken on substantial debt, including pledging shares of inflated stock for loans, putting the group on precarious financial footing. 5 of 7 key listed companies have reported current ratios below 1, indicating near-term liquidity pressure, it added.

"Our research indicates that offshore shells and funds tied to the Adani Group comprise many of the largest "public" (i.e., non-promoter) holders of Adani stock, an issue that would subject the Adani companies to delisting, were Indian securities regulator SEBI's rules enforced," the report cited.

"We believe the Adani Group has been able to operate a large, flagrant fraud in broad daylight in large part because investors, journalists, citizens and even politicians have been afraid to speak out for fear of reprisal," it stated.

Meanwhile, an Adani Group executive clarified to the media today that Hindenburg published report without making any attempt to verify factual matrix. The report is a malicious combination of selective misinformation & baseless allegations, Jugeshinder Singh, Group CFO, Adani Group told the media.

Singh clarified that the report is baseless & discredited allegations that have been tested & rejected by India's highest courts.

He added that timing of the report publication betrays a brazen, malafide intention to undermine Adani Group's reputation with objective of damaging upcoming follow-on public offer (FPO).

"The investor community has always reposed faith in the Adani Group on the basis of detailed analysis and reports prepared by financial experts and leading national and international credit rating agencies," Singh said.

Adani's flagship company Adani Enterprises is launching its follow-on public offering or FPO from this Friday (27 January 2023). At Rs 20,000 crore, Adani Enterprises FPO would be the largest ever in the history of India.

The FPO, which opens for subscription from 27 January and ends on 31 January, is a fresh issue of 61,474,751 equity shares on a partly paid basis. Shares would be alloted through a 100% book building process with a price band of Rs 3,112 - 3,276. Investors have to bid in multiples of 4 shares.

Investors applying for the FPO will have to pay 50% money upfront while the rest would have to be paid in subsequent tranches. Retail shareholders will enjoy 35% reservation and a discount of Rs 64 per share.

The company is raising funds to meet capital expenditure requirements (Rs 10,869 crore) for projects in the green hydrogen ecosystem, improvement works of certain existing airport facilities and construction of greenfield expressway. The remaining amount would be used to repay debt for Adani Airport Holdings, Adani Road Transport, and Mundra Solar and for general corporate purposes.