This move will likely curb a lot of speculation and short selling of the Adani Group stocks that can be traded in F&O segment too
The ten listed Adani Group firms’ stocks have lost over $100-bn m-cap together
Amid market volatility, National Stock Exchange on Thursday has placed Adani Enterprises, Adani Ports, Ambuja Cements under ASM (Additional Surveillance Margin) framework with effect from February 3, 2023, which will require 100% margin to trade in their shares. This will likely curb a lot of speculation and short selling.
“There shall be Additional Surveillance Measures (ASM) on securities with surveillance concerns based on objective parameters viz. Price / Volume variation, Volatility etc,” said NSE on its website to explain the measure.
The move by the stock exchange comes after a rout in the shares of the billionaire Gautam Adani’s group companies in the aftermath of a scathing report by a US short seller Hindenburg Research.
Adani Group’s market losses swelled to more than $100 billion on Thursday, sparking worries about their potential systemic impact, a day after its flagship company Adani Enterprises abandoned a Rs 20,000-crore share sale.
Adani Ports’ market cap has declined over Rs 65,000 crore while Adani Enterprises’ saw its m-cap erode by over Rs 2.1 lakh crore in the past six trading sessions, a 39% and 55% decline, respectively. Ambuja Cements, which Adani acquired last year, saw its m-cap fall nearly Rs 29,000 crore, which is a 29% fall.
Adani Enterprises’ shares tumbled 27% on Thursday, closing at their lowest level since March 2022. Other group companies also lost more ground. Adani Ports and Special Economic Zone shed nearly 7%, while Ambuja closed up 5.5% after losing nearly 17% in the previous session.
These stocks will also have a 5% daily price band, or the range within which a stock can be traded for that day.
“Applicable rate of margin shall be 50% or existing margin, whichever is higher, subject to maximum rate of margin capped at 100% with effect from February 6, 2023 on all open positions as on February 3, 2023 and new positions created from February 6, 2023,” said NSE.
The NSE also placed Monarch Networth Capital, one of the 10 underwriters of Adani Enterprises’ botched share sale, under additional surveillance.
The Ahmedabad-based brokerage was responsible for “non institutional marketing”, according to the Adani share sale document. Hindenburg had flagged Monarch in its research report for conflict of interest.
The withdrawal of Adani Enterprises’ share sale marks a dramatic setback for Gautam Adani whose fortunes rose rapidly in recent years but have plunged in just a week after Hindenburg’s critical research report.
The billionaire’s move to abort the share sale had an impact across markets, politics and business. Adani stocks plunged, Opposition called for a probe by a joint parliamentary committee or a Supreme Court-monitored panel and Reserve Bank of India reportedly sprang into action to check on banks’ exposure.
Meanwhile, Citigroup’s wealth unit stopped extending margin loans to its clients against securities of Adani Group, a day after Credit Suisse took a similar step.
Adani is also no longer Asia’s richest person, having slid to 16th in the Forbes rankings of the world’s wealthiest people, with his net worth almost halved to $64.6 billion in a week.
The 60-year-old had been third on the list, behind billionaires Elon Musk and Bernard Arnault.
Hindenburg’s report alleged an improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.
The Adani Group has denied the accusations, saying the allegation of stock manipulation had “no basis” and stemmed from an ignorance of Indian law. It said it has always made the necessary regulatory disclosures.
Adani had managed to secure share sale subscriptions on Tuesday even though the stock’s market price was below the issue’s offer price. Maybank Securities and Abu Dhabi Investment Authority had bid for the anchor portion of the issue, investments which will now be reimbursed by Adani.
With inputs from Reuters
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