The stocks of six Adani Group companies, run by billionaire businessman Gautam Adani, went into a tailspin on Monday after it came to light that accounts of three key foreign investors were frozen by depository NSDL, resulting in the conglomerate losing around £7 billion market value at one point during the session. The stocks, however, recovered later in the day after the group claimed that the accounts remained active.
Citing a mail from NSDL, the Adani group said the accounts of the three FPIs that were shown as frozen on May 31 on the depository’s website, remained active. “As may be verified from the said system, the status of demat accounts …are held in ‘Active’ status in (the) NSDL system,” a document from Adani group quoted from the mail it received from NSDL. All group companies informed the bourses that their registrar and transfer agents have also clarified that the demat accounts “in which the aforesaid funds hold the shares of the company are not frozen”.
The three foreign portfolio investors (FPIs) whose accounts were frozen as of May 31 were Albula Investments, APMS Investment and Cresta Fund. Their combined investment in the listed Adani entities add up to £4.3 billion. Sources said the accounts of these three FPIs, along with several others, were frozen as a result of an Sebi order of 2016 relating to depository receipts (DRs), that is Global Depository Receipts (GDRs) and American Depository Receipts (ADRs).
At the end of each month, depositories come out with the list of demat accounts which are frozen by it due to various reasons including regulatory directives and nondisclosures. Since the distinction between the accounts was not made on the NSDL site, the markets got jittery. As a result, in early trades, all the group companies - Adani Enterprises, Adani Ports & SEZ, Adani Power, Adani Transmission, Adani Green and Adani Total - were at their respective lower circuit levels, after falling up to 20%. The sell-off in one of the most talked-about groups in India, which saw its total market valuation jump multiple times in just a couple of years, weighed on market sentiment.
As a result, the sensex was down by about 450 points but after the company’s clarification, the index finally closed marginally higher, at 52,552 points, up 77 points on the day. On Monday, there was panic among investors on Dalal Street in early trades since the sell-off in these stocks was strong. This was more so because of the smart rise in group stocks in recent months, a dealer with a local brokerage said. For example, so far this year till Friday, the stock price of Adani Enterprises has gone up more than three times - from Rs 479 to over Rs 1,600. On Monday, after touching an intra-day low at Rs 1,441, the stock closed at Rs 1,501, mainly because of the end-of-the-session pullback rally, the dealer said.
