A man walks past a parked van with the signage of Indian conglomerate Adani in Mumbai on Feb 3, 2023. Shares of India's Adani Group companies fell sharply on the same day, as ripples from a market rout disrupted parliament for a second day. (PHOTO / AFP)

NEW DELHI – Shares of India's Adani Group companies fell sharply on Friday as ripples from a market rout disrupted parliament for a second day, fanning fears of systemic risk after a critical research report by a US short-seller.

Seven listed Adani enterprises lost more than half their market capitalization, which shriveled to less than $100 billion, after the Hindenburg Research report raised questions about the conglomerate's debt levels and use of tax havens.

Investor sentiment was jolted further after the group shelved its $2.5-billion share sale on Wednesday, one of the biggest setbacks for its billionaire chairman, Gautam Adani, whose fortunes had risen rapidly in recent years

Investor sentiment was jolted further after the group shelved its $2.5-billion share sale on Wednesday, one of the biggest setbacks for its billionaire chairman, Gautam Adani, whose fortunes had risen rapidly in recent years.

Lawmakers have called for a wider investigation of the matter, and sources have told Reuters the central bank has asked lenders for details of exposure to the group.

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Some politicians shouted slogans against Adani, an associate of Prime Minister Narendra Modi, in parliament on Friday.

"We want a joint parliamentary committee (to investigate)," they said. "Stop looting the poor."

Adani has called the Hindenburg report baseless and said its financials remain strong, but investor sentiment has withered, bringing an unabated fall in stock prices.

Shares of the flagship company, Adair Enterprises Ltd, were down 16% on Friday after earlier losing 35% to their lowest level since March 2021.

The stock's new low took its losses to nearly $33.6 billion since last week, for a decline of 70%.

Adani Ports and Special Economic Zone Ltd was down 2%, while Adani Transmission Ltd and Adani Green Energy Ltd slumped 10% each.

Adani Total Gas Ltd, a joint venture with France's TotalEnergies SE, fell 5%.

In a statement, TotalEnergies said it had limited exposure from stakes in Adani companies and had not re-evaluated the stakes.

"Contagion concerns are widening, but still limited to the banking sector," said Charu Chanana, a market strategist with Saxo Markets in Singapore. "The focus remains on further risks of index exclusions."

READ MORE: Adani's market losses top $100b on shelved share sale

On Thursday, S&P Dow Jones Indices said it would drop the Adani Enterprises flagship from widely used sustainability indices on Feb 7, which would blunt their appeal for environment-conscious investors.

"One of the big risk factors to watch for now is if more indices remove Adani stocks," said Chanana. "This can result in foreign outflows as funds sell Adani stocks, further aggravating confidence issues."

In this photo taken on Nov 19, 2022, Chairperson of Indian conglomerate Adani Group, Gautam Adani, speaks at the World Congress of Accountants in Mumbai. Shares of India's Adani Group companies fell sharply on Feb 3, 2023 as ripples from a market rout disrupted parliament for a second day. (PHOTO / AFP)

Foreign investors, many already underweight on India as they consider its stock market overpriced, are reducing exposure. Adani's wipeout could spread if it triggers a bigger mood shift.

The seven listed Adani firms together have a market capitalization of $113 billion, versus $218 billion before the Hindenburg report

In its report, Hindenburg said key listed Adani companies had "substantial debt" while shares in seven listed firms had a downside of 85% due to what it called sky-high valuations. It also alleged stock manipulation.

The Adani group said the allegation of stock manipulation had "no basis" and stemmed from ignorance of Indian law. It added that over the past decade, group companies have "consistently de-levered".

The seven listed Adani firms together have a market capitalization of $113 billion, versus $218 billion before the Hindenburg report.

For Adani, a former school dropout from Gujarat, Modi's western home state, the crisis presents the biggest reputational and business challenge of his life.

ALSO READ: Adani loses Asia's richest crown as stock rout deepens to $86b

The share meltdown is a dramatic turn of fortune for Adani, 60, who in recent years forged partnerships with, and attracted investment from, foreign giants as he pursued global expansion in industries from ports to power.

Adani has ceded the crown of Asia's richest person to Indian rival Mukesh Ambani of Reliance Industries Ltd as he has slid to 17th in Forbes' ranking of the world's wealthiest people. He had been third, after Elon Musk and Bernard Arnault.

The prices of US dollar bonds issued by group members edged higher on Friday after diving the previous day.

Adani Green's bonds maturing in September 2024 gained about 7 cents to 69.69 cents, off Thursday's record low of 60.56 cents.