Adani Saga and its Impact on Investors:

Last 10 days has been roller coaster ride for stock markets. between Adani saga and Union Budget, markets have been swaying widely.

Almost every investor has been concerned about the Adani episode and its impact on their investments. 

To address this, let us classify the concerned investors to 3 categories:

• Mutual Fund Investors
• Stock market Investors who didnot invest in Adani Stocks
• Stock market Investors who invested in Adani Stocks

If you are a mutual fund investor, the impact is NEGLIGIBLE. 

How could that be? 

It is because of 2 reasons : 

• Diversification - where in your money is spread across 50 to 100 stocks - cusioning the impact of any single stock. And it fund managers responsibility to chuck out bad ones and reinvest in good ones 
• Benefits of active fund management - where in their investment process avoided investing in Adani stocks. 

The bottom line is - Mutual Fund Investors need not worry.

If you are a direct stock market investor, but did not invest in Adani stocks - then why worry. Though your holdings may have knee jerk reaction due to market tremors, they are bound to regain stability.

If you had invested in Adani stocks, then you have a reason to rethink what to do now. 

(1) Book loss and exit 

(2) Hold on with hope of price recovery 

(3) Buy more at lower price. 

Since it is an ongoing crisis linked to the company, it is better to avoid further investment in their stocks. At best you can hold for some more time. You can exit when the share price bounces a bit - may be 10% to 20% from current levels and reinvest elsewhere. 

Dr. Ashwat Damodharan of Stern School of Business in New York has delibrated on this subject in his blog: https://aswathdamodaran.blogspot.com/2023/02/control-and-complexity-deconstructing.html?m=1 . If you are keen to know more about the Adani Saga, do take time to read it out. He gives a clear view.

For those who do not have time to read, here is his video. Do watch it to understand: