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The shares of Kotak Mahindra Bank fell nearly 2.5 per cent on Tuesday after Hindenburg Research, in its reply to markets regulator SEBI's show-cause notice, said Kotak Mahindra group created and oversaw the offshore fund structure used by the investor partner of Hindenburg to short Adani stocks – a claim that has been denied by the group.  

Kotak Mahindra Bank’s share fell 2.49 per cent to close at Rs 1,763.15 apiece.

In response to the SEBI’s show-cause notice, Hindenburg said: "Kotak Bank, one of India’s largest banks and brokerage firms founded by Uday Kotak, created and oversaw the offshore fund structure used by our investor partner to bet against Adani." It claimed that the group "simply named the K-India Opportunities Fund and masked the name 'Kotak' name with the acronym 'KMIL'".

Kotak Mahindra (International) Ltd, a unit of Kotak Mahindra Bank, said in a statement that Hindenburg was never a client of the group's K-India Opportunities Fund (KIOF) and Kotak Mahindra International Ltd (KMIL).

"KMIL and KIOF unequivocally state that Hindenburg has never been a client of the firm, nor has it ever been an investor in the Fund. The Fund was never aware that Hindenburg was a partner of any of its investors," a spokesperson for KMIL said in a statement.