Shares of Adani Group companies fell sharply on the stock market after the National Securities Depository Limited (NSDL) took action against three foreign funds that are among the top stakeholders in the firms.
All six listed Adani group companies have plunged on stock exchanges to hit lower circuits after the development was reported.
At 11:30 am, the shares of flagship Adani Enterprises were down 13.27 per cent at Rs 1,387.60 per share; Adani Green Energy was down 5 per cent at Rs 1,156.85 per share; Adani Total Gas was down 5 per cent at Rs 1,544.90 per share; Adani Transmission was down 5 per cent at Rs 1,522.50 per share.
It may be noted that Adani Enterprises Limited shares declined as much as 25 per cent to hit an intraday low of Rs 1,201.10, down over Rs 400 from last week’s close of Rs 1,601.45.
The flagship company’s market cap on the Bombay Stock Exchange fell to Rs 1.4 lakh crore. The stock has gained over 700 per in the past year, at least 200 per cent since the beginning of this year.
Read | Sensex, Nifty fall after NSDL’s action against 3 FPIs owning Adani Group shares
Shares of Adani Ports and SEZ also fell 19 per cent to hit an intraday low of Rs 681.60 and the market cap declined sharply to Rs 1.4 lakh crore.
The remaining listed companies of Adani Group — Adani Total Gas, Adani Green Energy, Adani Adani Power and Adani Transmission — hit 5 per cent lower circuits.
WHY ADANI GROUP SHARES FELL?
The foreign funds that have been frozen by NSDL hold stakes worth Rs 43,500 crore in four Adani group companies — Adani Enterprises, Adani Green Energy, Adani Total Gas and Adani Transmission.
The accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund have been frozen on or before May 31, as per information on NSDL’s website. An account freeze means that these foreign funds will not be able to sell any of the existing securities or buy any.
Officials at custodian banks that handle foreign investors said that the action has been taken against the foreign funds due to insufficient disclosure of information regarding beneficial ownership under the Prevention of Money Laundering Act (PMLA), reported The Economic Times.
The report, quoting officials, said that custodians usually warn clients of such action, but the accounts can be frozen if the associated FPIs do not respond or fail to comply. A statement from the Adani Group regarding the matter is awaited.
The development seems to have spooked investors of Adani group companies that have seen a meteoric rise since 2020. A correction in the short-to-medium term can be expected, according to stock market analysts.
It is a blow to billionaire industrialist Gautam Adani, whose companies have witnessed a meteoric rise on the domestic stock market since last year, helping him become Asia’s second richest man.