The Curious Case of Adani Stocks Sell-off2 min readReading Time: 2 minutes
On Monday June 14, 2021, the Adani Group witnessed unparalleled Monday blues. All 6 stocks of the group – Adani Green Energy, Adani Total Gas, Adani Transmission, Adani Power, Adani Enterprises, Adani Ports & SEZ fell by as much as 5% to 25% on Monday, and kept falling for the next 2-3 days.
The worst fall in almost a decade for Adani Group, you could say.
And this happened after Adani Group recently became the 3rd Group in India to cross $ 100 Billion in market cap with each of the 6 stocks giving multibagger returns in the past 1 year.
What Went Wrong?
The culprit was an infamous ET report dated Monday June 14, 2021.
This report stated that the National Securities Depository Limited (NSDL) had frozen the accounts of 3 foreign funds that have over Rs. 43,500 Cr invested in the Adani Group.
The three accounts in question are Albula Investment Fund, Cresta Fund and APMS Investment Fund. Notably, the accounts were suspended on or before May 31, 2021. These together owned about 2.1% to 8.91% stake in five Adani group companies as of March 31, 2021.
The report also underlined that Securities and Exchange Board of India (SEBI) has begun investigating the matter to figure out any possible price manipulation.
As per a circular issued by SEBI, all overseas investors have to furnish details of their sources of funds & end-beneficiaries.
Foreign Portfolio Investors (FPIs) needed to comply with the beneficial ownership criterion under PMLA provisions and should be made applicable for the purpose of know-your-customer (KYC). However, these FPIs did not reveal these details.
Have the Prevention of Money Laundering Act (PMLA) rules been disregarded?
How Did Adani Group React?
Adani Enterprises, the flagship firm of the Group, called this report out.
“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,” said Adani Group in a regulatory filing.
The next day, NSDL too, clarified that it had indeed frozen the accounts with regard to some specific accounts, long ago. There has been no new action taken and that the accounts are active.
What Happened Next?
One would’ve hoped that a clarification straight from NSDL should’ve comforted the markets completely.
Fear, confusion and skepticism hovered around the Adani stocks which only helped continue the downward trend for the next 2-3 days.
The Gradual Recovery
However, now the stocks have recovered quite a bit of ground, few of which are even hitting upper circuits in the past day or two.
Disclaimer – This content is purely for informational purpose and in no way advice or a recommendation.