Worries about the broader impact of bribery allegations against the Adani Group have rattled market sentiment in India, but global investors remain optimistic about the country’s long-term prospects. They argue India’s robust economic growth and vast consumer base continue to attract foreign capital despite recent turbulence.
The US charges the Adani Group’s ports-to-energy conglomerate of bribery, making false presentations, and offering a misleading view of itself.
Adani Group refutes those claims. Since these charges began appearing, Adani firms lost about $14 billion in market value. During this period, the Nifty 50 index gained around 3 percent, which suggests overall improvement. Governance and Transparency are on the radar
Investors expect a more intensive focus on corporate governance and openness in Indian companies. According to Chief Investment Officer at Balfour Capital Steve Lawrence, foreign investors may go more conservatively. However, he did emphasize that the overall appeal of the growing economy of India with an expanding market remains intact.
Foreign investment Resilient
Less than 20% of India’s $5.5 trillion equity market is controlled by foreign investors who seem to maintain confidence in it. Speaking of the issue related to Adani, the head of global emerging market equities at Alquity, Mike Sell termed this incident as a “stock-specific event” and observed still the interest of his clients towards giving them higher allocations for the India portfolio.
In comparison, following the profit-taking month and geopolitical jitters of October, foreign flows were steadier through LSEG data in November.
Challenges and Opportunities
Concerns extend beyond Adani, with disappointing earnings driving a shift away from consumer stocks like Hindustan Unilever and Dabur India. High valuations remain a perennial risk, with India’s Sensex trading at a price-to-earnings ratio of 23, higher than many global peers.
Yet investors like Abrdn’s James Thom think the Indian economy is already recovering with supportive government policies and structural reforms. “I recommend holding quality names with a good balance sheet and a good, long-term growth driver,” he said.
A Future So Bright
Despite some isolated issues, most investors think the Adani scandal won’t serve as a long-term deterrent. “India feels like China 15 years ago,” said Tareck Horchani of Maybank Securities. It’s booming, with wealth spreading and infrastructure development surging.
The long-term growth story here is still compelling, underpinned by this dynamic economy and strategic reforms.