Indian Tycoon’s Conglomerate Shaken by Market Rout

The conglomerate controlled by Gautam Adani, the politically connected Indian industrialist, lost about $50 billion in value this week after it was upended by a small investment firm in New York.

Late in the day on Tuesday, Hindenburg Research, a firm that made its name by betting against cryptocurrency companies and unprofitable electric vehicle makers, published a report accusing the billionaire tycoon’s company, the Adani Group, of “a brazen stock manipulation and accounting fraud scheme.” After an initial market wobble on Wednesday, trading paused on Thursday, when markets in India closed for the country’s annual Republic Day.

But when trading resumed on Friday, some of Mr. Adani’s companies dropped 20 percent in frenzied trading, the maximum allowed by exchanges, before trading was halted. India’s benchmark stock index fell 1.6 percent that day, its worst drop in more than a month. Overall, the Adani Group lost about a fifth of its value since the Hindenburg report was released.

The Adani Group has dismissed Hindenburg’s allegations in a series of rebuttals, calling them “a maliciously mischievous attempt” to profit by sinking its shares. “The volatility in Indian stock markets created by the report is of great concern and has led to unwanted anguish for Indian citizens,” the company’s legal chief said, and threatened to sue.

Hindenburg is what’s known on Wall Street as a short seller, which makes money via investments that pay off when a company’s share price falls.

The speed and scale of the Adani Group’s losses mirror, in miniature, its rise to international prominence. In the 1980s, Mr. Adani founded a polymers import-export business that became the basis for his conglomerate, which today encompasses holdings in ports, power, food and more. The group’s growth surged in recent years, as it expanded into airports and renewable energy.