‘Unusual price movement in stocks of a conglomerate… stock markets transparent, fair and efficient’

Without mentioning the crash in the stocks of Adani group companies last week, Sebi said, “during the past week, unusual price movement in the stocks of a business conglomerate has been observed.” However, the regulator did not give any indication that it’s probing the crash in Adani stocks.

The regulator sought to reassure the investors saying that the financial market has demonstrated ongoing stability and is continuing to function in a “transparent, fair and efficient manner”.

The Sebi assurance came after the Reserve Bank of India (RBI) on Friday said the banking sector remains resilient and stable. Without naming any large corporate, the RBI said it remains vigilant and continues to monitor the stability of the country’s banking sector.

“SEBI is committed to ensuring market integrity and continues to have the appropriate structural strength to function in an uninterrupted, transparent and efficient manner as has been the case so far,” Sebi said in the statement.

“As part of its mandate, SEBI seeks to maintain orderly and efficient functioning of the market and has put in place a set of well defined, publicly available surveillance measures (including the ASM framework) to address excessive volatility in specific stocks. This mechanism gets automatically triggered under certain conditions of price volatility in any stock,” it said.

The flagship of the Adani group, Adani Enterprises (AEL), came under huge selling pressure and its stock fell by 54 per cent after the Hindenburg report on the Adani group came out on January 24. Nine other listed Adani stocks had crashed by up to 50 per cent since then and even led to an intra-day fall in the Sensex on February 1 when the Budget was announced. The group had to call off AEL’s follow-on public offer (FPO) a day after it managed to get full subscription to the issue, following interest from non-institutional investors and family offices of large corporations.

On a longer-term basis also, Indian markets have been viewed positively by investors, it said. A cross country comparison of dollar adjusted market returns with both peer and developed countries, during the past 3 years till date, places the Indian market as a positive outlier, Sebi said.

The National Stock Exchange (NSE) last week put Adani Enterprises Ltd, Adani Ports and Special Economic Zone Ltd and Ambuja Cements under Short-Term Additional Surveillance Measure (ASM). This means there will be additional margins in trading in these stocks.

“Market participants may note that ASM framework shall be in conjunction with all other prevailing surveillance measures being imposed by the Exchanges from time to time,” NSE said. The NSE move came after Adani Enterprises plunged 26.50 per cent and Adani Ports fell 6.13 per cent on Thursday.