Fin Min to look into Adani trades

Seeks clarification from Sebi, exchanges

The Union ministry of finance (MoF) has asked market regulator Securities and Exchange Board of India (Sebi) and stock exchanges to investigate the volatility in share prices of Adani Enterprises on Wednesday.

MoF sent letters on Thursday after a written complaint from the Investors Grievances Forum (IGF).

 

“The finance minister has written to both NSE and BSE. The main bone of contention is that the exchanges did not hold a price discovery session for the Adani Enterprises’ stock which was demerged into three entities,” said Hinesh Doshi, vice president of IGF.  

IGF has alleged the exchanges did not allow for a special price-discovery session for the stock of Adani Enterprises, following the demeger of the company into three different companies. This led to heavy volatility in the stock price which opened at Rs 574.25 and crashed 76.5 per cent to Rs 134.50 within the first hour of the trading.

 

The stock ended at Rs 109.75 on Wednesday after touching a day’s low of Rs 107, a fall of 81 per cent. On Thursday, share closed at Rs 116.50, up 6.2 per cent.

“...the fair value of shares of Adani Enterprises is not more than Rs 120 a share and trading should not have been allowed at the maximum of Rs 120 per share or a special session should have been called for the purpose of determining fair value of shares through the price discovery mechanism,” said the letter addressed to Sebi written by Sandeep Shah, member-core committee of the IGF.

The letter was presented by Kirit Somaiya, member of parliament, to Manoj Joshi, joint secretary, ministry of finance.

According to sources, the MoF has sought a clarification on why the price discovery session was not held. It has also sought answers on the number of people who short sold the stock during the period when the prices were volatile, the volumes seen during that period and whether annulment of trades would be conducted in this case.

“A lot of people who knew about this managed to sell and get out. But a lot of retail investors were stuck and saw their share prices fall sharply. We received a lot of complaints and calls on Wednesday from concerned investors which is why we decided to take up the issue,” said Doshi.

BSE declined to comment on the issue in response to an email query. An email to NSE remained unanswered at the time of going to print.