The National Stock Exchange, popularly known as NSE, has taken action to curb short-selling in Ambuja Cements, Adani Enterprises and Adani Ports as stocks continue to experience a massive stock rout. The NSE has placed these companies under the ASM framework (Additional Surveillance Measure), effective Feb 3, 2023.
The ASM list is used to monitor securities due to factors such as price fluctuations, volatility, and volume variance. The exchange has stated that the inclusion of these stocks on the ASM list is only for market surveillance purposes and should not be viewed as an adverse action against the company.
The NSE has declared that it will enforce a margin rate of either 50% or the current margin, whichever is greater, with a cap of 100% on all open positions as of February 3, 2023 and any new positions established from February 6, 2023, in a move aimed at controlling short-selling. The stocks will be monitored for a minimum of 5 trading days and will be eligible for review on the 6th trading day.
As part of the ASM framework, the NSE will seek clarification from the companies about any announcements that have not been disseminated to the market. The clarification received will then be disseminated to the market. A surveillance dashboard will be displayed on the Exchange’s website to provide relevant information to investors.
Adani Enterprises has decided to return funds to its investors and cancel its previously fully subscribed Follow-On Public Offering (FPO) worth INR 20,000 crore. This decision was made in response to accusations from an American research company, Hindenburg Research, who claimed that the company utilized tax havens and raised concerns regarding debt in a report.
Billionaire and chairman of the Adani Group, Gautam Adani, spoke publicly for the first time since the controversy, saying the sudden withdrawal of the FPO was due to market volatility. The Reserve Bank of India has also asked banks for details of their exposure to the Adani Group. Despite this, Adani Enterprises’ stock dropped over 26% to close at INR 1,564.70 on the Bombay Stock Exchange on February 2, while Adani Ports ended 6.13% lower at INR 462. Meanwhile, Ambuja Cements had a recovery and closed 5.33% higher at INR 352.45.
In conclusion, the NSE’s decision to put Ambuja Cements, Adani Enterprises and Adani Ports under the ASM framework highlights the ongoing stock rout and the exchange’s efforts to regulate short-selling in these stocks.
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