Shares of Vedanta Ltd witnessed a sharp fall on July 9 after a damaging report by short-seller Viceroy Research raised serious concerns about the financial health of its parent company, Vedanta Resources. The report triggered panic among investors, leading to a 4.5% decline in the stock price by midday.
In its report, Viceroy claimed that Vedanta Resources resembles a Ponzi scheme, describing the group structure as “financially unsustainable” and “operationally compromised.”
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Viceroy’s Allegations Rattle Investor Sentiment
The report directly targeted the debt levels and financial practices of Vedanta’s parent entity, sparking fears of deeper structural issues. Terms like “Ponzi scheme” used by Viceroy added to the alarm, leading to swift selling pressure in the stock.
As of 12:25 PM, Vedanta shares were trading at ₹435.6, down 4.5%, after hitting an intraday low of nearly 7% earlier in the day.
Hindustan Zinc Also Hit; Metal Stocks Under Pressure
The impact of the report wasn’t limited to Vedanta Ltd. Hindustan Zinc, another company under the Vedanta group, also saw its shares drop 2.6%, trading around ₹425.
This negative sentiment spilt over into the broader market as well. The Nifty Metal index slipped 1.7%, with Vedanta and Hindustan Copper leading the losses.
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Market Outlook
The sharp decline in Vedanta shares following the report reflects the fragile investor sentiment around corporate debt and governance issues. Short-seller reports often create short-term volatility, but this one, with strong wording and accusations, has shaken market confidence in the group’s financial structure.
Investors will now be closely watching Vedanta’s response, if any, to Viceroy’s report and whether regulators or rating agencies weigh in on the matter.
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