{"id":41067,"date":"2026-06-05T20:05:17","date_gmt":"2026-06-05T14:35:17","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=41067"},"modified":"2026-06-05T20:05:17","modified_gmt":"2026-06-05T14:35:17","slug":"all-that-glitters-is-suspicious","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/all-that-glitters-is-suspicious\/","title":{"rendered":"All That Glitters (Is Suspicious)"},"content":{"rendered":"

Have you ever visited a factory or an office, inspected a shipment or spoken to a company\u2019s customers or vendors before making a decision to invest in that company? Chances are we wouldn\u2019t have. Most of us anyway.<\/span><\/p>\n

There\u2019s a reason behind that: most of us don\u2019t make decisions based on direct observation. We rely on company disclosures, audited accounts, regulatory filings and a wider system designed to make information credible enough to act upon. Most of the time, that system operates quietly in the background. But, this week, it became the story.<\/span><\/p>\n

The Securities and Exchange Board of India issued an interim order against Rajesh Exports Ltd, alleging that the gold refiner and jewellery maker inflated its revenue by 97-99% between FY21 and FY25.<\/span><\/p>\n

So, what exactly has the regulator flagged and why is it significant?<\/span><\/p>\n

Broadly, SEBI said that 99.8% of the company\u2019s consolidated revenue came from its subsidiaries, particularly the Swiss unit Valcambi. But it didn\u2019t publicly disclose its subsidiaries\u2019 financials. So, their business activities couldn\u2019t be verified.<\/span><\/p>\n

By doing so, Rajesh Exports inflated its revenue to the tune of Rs 15.15 trillion ($158.30 billion), SEBI alleges. For perspective, this is more than Reliance Industries Ltd\u2019s entire FY26 revenue of $124 billion and more than a third of India\u2019s entire merchandise exports of $442 billion in FY26.<\/span><\/p>\n

This is not all. SEBI noted that Rajesh Exports recorded Rs 11,487 crore in sales and Rs 11,488 crore in purchases with a company called Affluence Shares and Stocks Pvt Ltd, but Affluence denied any such transactions. The regulator alleged that these fake entries were linked to Rajesh Exports owner Rajesh Mehta\u2019s personal derivative trades. It also alleged that Rajesh Exports routed company funds worth Rs 339 crore to Mehta\u2019s personal accounts without board approval.<\/span><\/p>\n

Finally, SEBI has estimated the wealth erosion of the company\u2019s shareholders, which include about 1.9 lakh retail shareholders, at Rs 12,726 crore due to the misrepresentation and fund diversion.<\/span><\/p>\n

But is the SEBI order really a surprise or did someone see it coming? Actually, several probably did. In fact, SEBI started its investigation in 2024 after a shareholder filed a complaint.\u00a0<\/span><\/p>\n

There were more indications of trouble. The company\u2019s stock price has plunged nearly 90% since February 2023, reducing its market cap to less than Rs 3,100 crore from over Rs 30,000 crore. Moreover, no mutual fund has invested in the company over the past decade, though state-owned Life Insurance Corp holds a 10.8% stake.<\/span><\/p>\n

The regulator has now barred chairman Rajesh Mehta from the securities market pending further proceedings.\u00a0<\/span><\/p>\n

On its part, Rajesh Exports has said that its financial disclosures were correct and that SEBI\u2019s observations stemmed from differences in revenue calculations.<\/span><\/p>\n

Where does the case go from here? And what does it tell us about our corporate sector and the regulatory system?<\/span><\/p>\n

Well, the allegations may be challenged, defended or revised as the process unfolds. But the episode raises a critical question: How much of what investors rely on can they actually verify for themselves?<\/span><\/p>\n

At first glance, markets have multiple layers of protection. Companies publish financial statements, auditors review them, analysts scrutinise them, regulators oversee them, and investors compare them against competitors and industry trends.<\/span><\/p>\n

But none of that changes a basic reality. External shareholders or investors do not independently verify every sale, shipment or contract. They invest using information they did not personally collect. The role of disclosures, audits and regulatory oversight is to make that information reliable enough for decisions to be made.<\/span><\/p>\n

Most of the time, that framework attracts little attention. When questions emerge around it, investors are reminded how much depends on it. That is what makes the Rajesh Exports case significant.<\/span><\/p>\n

That does not imply the allegations will ultimately be proven. Nor does it mean investors should begin treating every corporate disclosure with suspicion. But cases like this can weaken confidence in the short term. Investors naturally wonder whether other issues may have gone unnoticed. Moreover, they often evaluate a company basis its growth, margins, earnings and valuation. Cases like this suggest that those questions come later. Before forecasts, models and price targets comes a simpler one: Can the information itself be trusted? Every market depends on its answer.\u00a0<\/span><\/p>\n

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\"SIP_Kuvera\"<\/b><\/strong><\/span><\/p>\n

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The Crypto Question<\/b><\/h3>\n

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Talking about trust, let\u2019s move on to another asset class where this key attribute has been largely missing thus far\u2014at least in India. That asset class is cryptocurrency.<\/span><\/p>\n

For years, the biggest question hanging over crypto in India was whether it would be allowed to exist at all. What made crypto unusual was not the debate itself. Financial innovations often attract scepticism. It was the fact that the market continued to grow even as its future remained unclear. Investors traded, platforms launched new products, capital flowed in and out. But a more fundamental question remained unresolved: Could the door eventually close?<\/span><\/p>\n

This is why a routine announcement this week from Coinbase finds relevance beyond just a headline. The US-listed crypto exchange said that Indian users can now deposit and withdraw funds directly in rupees.\u00a0<\/span><\/p>\n

On the surface, it is a product update. But the significance of the announcement lies in what it reflects. For one, it marks Coinbase\u2019s commitment to India. The company had discontinued its services in India in 2023 and resumed last year after registering with the finance ministry\u2019s Financial Intelligence Unit.<\/span><\/p>\n

The most interesting shift is the nature of the questions people are asking. A few years ago, much of the debate was framed in existential terms. Should cryptocurrencies be permitted? Could exchanges operate at all? Would tighter regulation eventually amount to a de facto ban?<\/span><\/p>\n

Today, the discussion sounds different. How should exchanges operate? What compliance standards should apply? How should transactions be monitored? What protections do investors need?<\/span><\/p>\n

Crypto\u2019s journey has been particularly turbulent. Periods of enthusiasm have alternated with periods of deep scepticism. Regulatory concerns have surfaced repeatedly. Globally, exchange failures have tested confidence. In India, banking restrictions, taxation changes, legal challenges and compliance norms have repeatedly altered sentiment. Yet through each turn, participation persisted.<\/span><\/p>\n

That may be the more revealing story beneath this week’s announcement. Coinbase did not create the shift in the debate. If anything, it is responding to it. Its willingness to continue building products and services for Indian users suggests it increasingly sees a path \u2013 however imperfect \u2013 within the country’s evolving regulatory framework.<\/span><\/p>\n

That does not mean crypto’s place in the financial system is settled. Questions around utility, valuation, consumer protection and systemic risk remain alive. Regulators around the world are still trying to determine where those boundaries should sit. But the most telling sign of change is not that the arguments have disappeared. It is that the arguments have changed.\u00a0<\/span><\/p>\n

For years, the defining question was whether crypto belonged inside the financial system at all. Today, the discussion is increasingly about the rules under which it will operate. In finance, that can be a meaningful transition. Not because uncertainty has vanished, but because uncertainty has taken a different form.<\/span><\/p>\n

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Anthropic\u2019s Big Move<\/b><\/h3>\n

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Switching from cryptos to artificial intelligence, retail investors will soon be able to invest in the world\u2019s most valuable AI company. Anthropic, which develops the Claude family of AI models, has confidentially filed for a US initial public offering, becoming the first major AI firm to move towards a stock market listing.<\/span><\/p>\n

The filing comes soon after Anthropic raised $65 billion from private equity and venture capital investors in a round that valued it around $965 billion, higher than its main rival and ChatGPT maker OpenAI. The IPO\u2019s significance extends well beyond Anthropic itself. It may mark the point at which the AI conversation starts changing.<\/span><\/p>\n

For most of the AI boom, investors could participate in the story without having to price the companies at the centre of it. They could buy chipmakers, cloud providers and software firms. They could invest in the infrastructure supporting AI. What they couldn\u2019t do was invest in the businesses actually building the AI models. Soon, they will be able to do it.<\/span><\/p>\n

The challenge for investors is that AI\u2019s growing importance is becoming easier to observe than its eventual economics.<\/span><\/p>\n

Part of the difficulty is that frontier AI companies do not fit neatly into familiar categories. They resemble software businesses because their products can be distributed globally. They resemble infrastructure companies because they require vast computing resources and continual capital investment. They resemble research organisations because maintaining a technological edge demands constant experimentation.<\/span><\/p>\n

Public markets have long experience valuing each of those models separately. What remains less clear is how to value a company that appears to be all three at once. That uncertainty sits at the centre of the industry’s next phase.<\/span><\/p>\n

There is another factor to consider. The AI race is proving extraordinarily capital-intensive. Building larger and more capable models requires enormous investments in computing power, specialised hardware and supporting infrastructure. The leading companies are competing not only on innovation but also on their ability to continually fund that innovation.\u00a0<\/span><\/p>\n

As a result, investors are increasingly confronting questions that feel more familiar to public markets than technology conferences: How durable are today’s advantages? How much capital is required to remain competitive? Can revenue growth eventually translate into attractive returns? And where in the AI ecosystem do those returns ultimately settle?<\/span><\/p>\n

These questions do not yet have clear answers. A single IPO will not provide them. But it will begin subjecting some of the industry’s most important companies to a different kind of scrutiny. For years, AI has largely been priced through expectations about what the technology might become. As more frontier AI companies approach public markets, investors will gain a clearer view of operating performance, profitability, capital requirements and competitive dynamics. The conversation is unlikely to become less important. It may simply become more demanding.<\/span><\/p>\n

For much of the AI boom, investors focused on possibility. Public markets are now preparing to focus on price. And Anthropic’s IPO may be remembered as one of the first moments those two conversations were forced to meet.<\/span><\/p>\n

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RBI Moves<\/strong><\/h3>\n

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Moving on to some macroeconomic news, the Reserve Bank of India announced its monetary policy this week and unveiled a raft of measures to defend the rupee as the country struggles with foreign outflows and costlier oil imports.<\/span><\/p>\n

The central bank kept its repo rate unchanged and retained its policy stance as \u201cneutral\u201d, despite calls from certain sections to either raise the rate or change the stance or take both measures in the wake of the rupee\u2019s weakness.<\/span><\/p>\n

The RBI\u2019s six-member monetary policy committee voted unanimously to keep the repo rate unchanged at 5.25%, with Governor Sanjay Malhotra saying that the panel felt it would be \u201cprudent to wait for greater clarity to emerge\u201d.<\/span><\/p>\n

The RBI, however, lifted its retail inflation forecast to 5.1% this fiscal year, from 4.6% earlier, and lowered its GDP outlook to 6.6% for this year from 6.9% it predicted in April. The twin revisions are clear indications of a worsening economy.<\/span><\/p>\n

The RBI also announced several steps to stabilise the rupee after the currency dropped more than 5% against the dollar this year and seemed headed towards the psychologically important level of 100 versus the greenback.<\/span><\/p>\n

The RBI said it will offer concessional forex swaps to encourage state-owned companies to raise dollar loans. It will also compensate banks for hedging costs on three-year and five-year foreign currency deposits by non-resident Indians.<\/span><\/p>\n

But the biggest announcement came from the government, which decided to scrap capital gains tax for foreign investors on government bonds and remove the 20% tax on interest earned from such investments, effective April 2026. Foreign investors currently pay a 12.5% long-term capital gains tax on listed shares and bonds held for more than 12 months.<\/span><\/p>\n

Will these measures help stem the rupee\u2019s slide? Analysts and economists are hopeful, with some expecting dollar inflows of as much as $60 billion. Some others remain sceptical. US Treasury yields are hovering around 4.5%. Add hedging costs to take into account the rupee\u2019s depreciation and the near 7% yield on Indian government bonds doesn\u2019t appear to be very enticing. That\u2019s why a rate hike becomes inevitable. It\u2019s not a question of \u2018if\u2019 but \u2018when\u2019.<\/span><\/p>\n

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\"FD_Kuvera\"<\/p>\n

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Market wrap<\/b><\/h3>\n

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India\u2019s stock market benchmarks fell this week as foreign outflows continued and oil prices remained elevated.<\/span><\/p>\n

The 50-stock Nifty fell about 0.8% and the 30-share Sensex slid 0.7% this week. This takes their year-to-date losses to 10.6% and 12.9%, respectively. Market breadth was negative with two out of three Sensex or Nifty stocks falling.<\/span><\/p>\n

The fast-moving consumer goods index was the top sectoral loser this week, slipping 2.2% on concerns of a weak monsoon this year. Tata Consumer lost 4% while Nestle India and ITC fell more than 2% each and HUL slipping 1.5%.<\/span><\/p>\n

Overall, state-run NTPC was the top loser as it dropped 6.5% followed by UltraTech and Bajaj Finserv with a drop of 5% and 4.5%. HDFC Life, Hindalco, Larsen & Toubro and SBI Life were among the other stocks that ended in the red.<\/span><\/p>\n

Tech stocks were mostly down, with Infosys being an exception as it gained more than 3%.<\/span><\/p>\n

Titan was the biggest Nifty gainer, jumping 4.5%, followed by Adani Enterprises, which climbed 3.8%. Coal India, Eternal, IndiGo parent InterGlobe Aviation, Apollo Hospitals and SBI were among the others that closed in the green.<\/span><\/p>\n

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Other Headlines<\/b><\/h3>\n

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