On 11 March 2024, it was reported by the FT that due to changes made by SEBI in response to last year's short selling activity in Adani that several hedge funds have scaled back their investment in the country.

Background

• New rules require large foreign investors — including hedge funds — betting on Indian stocks to reveal all their “end investors”,
• foreign investors with more than $3bn of assets in the Indian market to disclose “granular details” of end investors benefiting from the investment
• this includes any hedge funds using prime broking services at a bank which has itself breached the $3bn threshold
• and also covers investors that have allocated 50 per cent of their Indian portfolio to any one company

Hedge funds argue this change to short selling regulations would create “severe practical difficulties” and are a stark departure from standard international practice. The hedge fund trade body AIM wrote: “The changes create severe practical difficulties for [foreign investors] wishing to make legitimate investments in India.”