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Whelved Whales

Standard & Poor's (better called the S&P), Fitch and Moody are the three prominent players in the world of credit rating. Their words have such a significant impact on the speculative markets all over the world that one can safely call them the ventriloquists of the modern era. But reputation is a goose laying golden eggs; it must be well-fed and well-kept. Therefore, it's surprising that when Fitch's holding CreditSights reported that the Adani enterprises were deeply debt leveraged, the regulating authorities should have batted their eyelids. A lousy bureaucracy is no excuse for a country aspiring to be in the top 5 of the world's stock markets. In fact, a BBB- is a stern warning that we are looking at the humble origins of the 2008 subprime crisis. 

A bigger and yet more straightforward question is what drove the Adani stocks so much? And quite a bit of the answer comes from the defence Adani group put out to the Hindenberg research - a rising nationalist sentiment. Although politics is an economist's poison, few can resist the female fatale. When Adani was busy acquiring ports (both air and water) and floating, holding one after the other, there was some confidence that it was the company chosen to shoulder the new and rising India. Although it's a domain in which L&T and the Tatas have been relatively more active, Adani was the challenger everybody wanted to bet on. So much so that the usually indolent LIC and SBI jumped on the smoking gun. 

There is a lack of evidence to point out that Adani was at fault, But if the stock markets were a great poker game, Adani's dominating position in the flop is heavily challenged in the turn. Unsettling questions like how a stock could skyrocket on the basis of simple acquisitions, the Adani's are no Apple, which aims at disrupting the market; they are building an empire, which often gives a slow and tedious growth. Yet, there is a final show of hands left as the river approaches; with the FPOs delayed and a bloodbath in the markets, Adani's have to quickly summon their gear and prevent the deemed collapse. As with Hindenburg, are they conjuring a conspiracy or uncovering a con with their opprobrious report; time will tell.

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