Indian shares drop as Adani firms tumble on US bribery charges on group chair

India's benchmark equity indexes fell on Thursday, dragged down by a plunge in Adani group company stocks after U.S. authorities indicted Gautam Adani, the conglomerate's chairman, over his role in a $265 million bribery scheme.

The NSE Nifty 50 NIFTY was down 0.78% at 23,336.9 points, as of 11:04 a.m. IST, while the BSE Sensex SENSEX fell 0.66% to 77,066.96.

U.S authorities said Gautam Adani and seven other defendants, including his nephew Sagar Adani, agreed to bribe Indian government officials to win contracts expected to yield $2 billion of profit over 20 years, and develop India's largest solar power plant project. The group has not responded to requests for a comment.

Adani Enterprises ADANIENT, the group's flagship company, sank 22.3% while Adani Ports ADANIPORTS lost 20%. They were the top drags on the Nifty.

The other group stocks tumbled between 8.5% and 20%, with the group companies losing about $22 billion in combined market value in early trade.

"Investors do not like any lapse of corporate governance, and till there is clarity, investors will shy away from the group," said Saurabh Jain, assistant vice president of retail equities research at SMC Global Securities.

The news, which had triggered the dollar bond prices for Adani companies to fall sharply in early Asia trade, also affected other sectors.

Eleven of the 13 major sectors posted losses, with state-owned lenders CNXPSUBANK leading with a 3.6% drop, followed by the energy sub-index CNXENERGY which lost 2.2%.

"As far as the selling in banking stocks, many of the lenders have significant exposure to the Adani group. And if something materially negative comes out of these latest allegations, then the drop could intensify further," Jain said.

The broader, more domestically focused small- CNXSMALLCAP and mid-caps CNXMIDCAP lost about 0.5% each.

Among other stocks, Dr. Reddy's DRREDDY lost about 3% after the U.S. drug regulator highlighted regulatory problems following an inspection of one of its manufacturing plants.