- Our recommended Indian equity fund, the UTI India Dynamic Equity USD, has no exposure to Adani Group companies. Most of the Group’s companies belong to the commodities, energy, utilities, and infrastructure sectors, all of which the fund has stayed away from.
- While the fund has a high concentration in the financials sector, the Indian banking industry’s exposure to Adani Group’s debt is estimated to be limited, especially for private banks. There is likely little systemic risk.
- However, this situation may continue to weigh on sentiment for Indian equities which have already mellowed as investors re-allocate to China equities after its re-opening.
- While we remain negative on Indian equities, it is on our watch list due to its compelling secular growth opportunities. For investors who are already underweight Indian equities, we do not see the Adani controversy as a catalyst to sell. For investors who wish to seek exposure to Indian equities, we advocate investing via a regular savings plan.
The Adani controversy in a nutshell
Chart 1: Adani Group companies have fallen between -14% to -46% since 24 January, after the Hindenburg report was released
Is our recommended fund exposed?
What about indirect exposure?
Chart 2: The fund has a high concentration in the financials sector (25%)
Chart 3: Exposure to Adani Group and its affiliated companies
Why we continue to favour this fund
Table 1: List of major reforms and secular domestic tailwinds
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Reforms and secular domestic tailwinds |
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Demographic dividend |
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Middle-class transformation |
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Reduced corporate tax rates |
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Supply-chain diversification |
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Production-linked incentive scheme |
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Our thoughts and key takeaways
The Research Team is part of iFAST Financial Pte Ltd.
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