Adani Group stocks showed early gains on Tuesday morning after bleeding over $6 billion on Monday, June 14. The company took a beating on Monday after reports claimed that 3 foreign portfolio investors – that held significant share in the group’s companies – were frozen by the NSDL (National Securities Depository LTD).
Background
On Monday, June 14, business media reports emerged claiming the NSDL had frozen accounts of 3 FPI – Albula Investment Fund, Cresta Fund & APMS Investment Fund of Adani Group’s companies. These portfolio investors together have ownership of shares worth over Rs. 43,500 crores. After the news made the rounds of the business street, the company bled over $6 billion in its intraday trading.
Details
After the devastation caused by Adani Group shares on the Dalal Street on Monday, the shares of certain companies in the group showed early growth today, June 15. While Adani Transmission, Adani Green, Adani Gas and Adani Power are all showing red, Adani Ports added half a percent growth before slumping down, Adani Enterprises is trading in green.
Shares of Adani group were breaking benchmarks after benchmarks in the past year with multiple occurrences of upper circuit placed on the shares. The market cap of the shares of Adani Group has already touched Rs. 9.5 lakh crore.
One of the group’s companies – Adani Port – saw its shares surge as much as 145% in one year. Other key companies including Adani Transmission, Adani Green Energy, Adani Power and Adani Enterprises surged as high as 697%, 280%, 310% & 906% respectively.
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However, the streak of growth got broken on Monday after reports emerged from economic news forums which said that the National Securities Depository Limited (NSDL) had frozen the company’s 3 foreign portfolio investors (FPIs).
Owing to the fact that these investors together had over Rs. 43,000 crore worth of shares in the group, the market sentiment got hurt and the stocks plummeted.
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Why were the 3 FPI accounts claimed to be frozen?
According to reports, the accounts were frozen by the NSDL due to lack of information regarding the ownership of the accounts. These FPI accounts failed to comply with the KYC (Know Your Client) norms. SEBI (Security Exchange Board of India) clearly lays down regulatory rulebook for FPIs and in the past have amended its frameworks to keep it working in tandem with other laws regarding money laundering, etc. FPI are always required to furnish details regarding to their owners & the personal details of other key people and managers.
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“Reports Blatantly Erroneous”: Adani Group issues statement
After the financial bloodbath that Adani Group witnessed, it issued a statement later on Monday claiming the media reports to be blatantly erroneous.
The company’s statement said-
“We bring to your kind attention, the news headlines published in ET that NSDL has frozen the accounts of 3 foreign funds-Albula Investment Fund, Cresta Fund and APMS Investment Fund holding shares in Adani Group Companies. We regret to mention that these reports are blatantly erroneous and are done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group”
Adani Enterprises said in a statement.
Later in the day when the Gautam Adani owned group issued the statement, some of its companies showed signs of restoration. Adani Ports which slumped to Rs. 681.50 recovered to Rs. 768.70. Adani Enterprises, which slumped 25% closed at Rs. 1,501.25, with a loss of 8.36%. Rest of the companies which include Adani Green Energy, Adani Power, Adani Transmission and Adani Total Gas all showed red at the time of market closing.
