INDIA STOCKS-Indian shares sink; Adani Group stocks plunge to lower circuit

(Updates index levels, adds quote)

By Rama Venkat

BENGALURU, Jan 27 (Reuters) - Indian shares fell more than 1% to an over three-month low on Friday as some Adani Group companies plunged 20% and hit their lower circuits in the wake of a short-seller attack on the conglomerate, which also dragged down financials.

The Nifty 50 index was down 1.68% at 17,591.25 as of 1:23 p.m. IST, while the S&P BSE Sensex fell 1.51% to 59,294.20.

The indexes have slid more than 2% each in the truncated week, triggered by U.S. short-seller Hindenburg Research's report on Wednesday that flagged concerns about the Adani Group's debt levels and use of tax havens.

Stocks of the Adani Transmission, Adani Green Energy tumbled 20% each, while Adani Power dropped 5%, with all three stock hitting their lower circuit.

Adani Ports and Adani Enterprises were the worst performers on the Nifty 50, plunging more than 20% each.

Adani Enterprises was trading at 2,877.10 rupees, well below the lower end of the price band for its $2.45 billion follow-on public offering (FPO).

"The selloff is seriously extreme in the sense that day before yesterday Adani Group stocks saw a huge fall in market cap and today the same kind of episode is repeated," said Saurabh Jain, assistant vice-president, research, SMC Global Securities.

"It has clearly dented overall investor sentiment. The nervousness has led to a fall in stocks across the board. When a selloff of this kind of magnitude is seen in a very short span of time, investors sell other stocks where they are in the money."

Financials sector led the slide, falling 2.8% even though brokerages said banks' exposure to the Adani Group was within manageable limits. (Reporting by Rama Venkat and Bharath Rajeswaran in Bengaluru; Editing by Savio D'Souza)