Sebi on Adani share price movement: Observed unusual price movement, committed to ensure market integrity

Sebi’s statement comes shortly after the RBI statement on same issue

Market regulator Sebi on February 4 said it has observed unusual price movement in the shares of a conglomerate, referring to the embattled Adani group.

The regulator said in all specific entity related matters, if any information comes to Sebi’s notice, the same will be examined and after due examination, appropriate action will be taken.

Sebi’s statement comes shortly after the Reserve Bank of India (RBI) issued a statement on the Adani group crisis.

“During the past week, unusual price movement in the stocks of a business conglomerate has been observed,” Sebi said.

“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 to address excessive volatility in specific stocks,” it added.

The National Stock Exchange (NSE) on February 2 put three Adani stocks, namely, Adani Enterprises, Adani Ports, and Ambuja Cements, under the additional surveillance measure (ASM) framework from February 3, 2023.

A day earlier, the RBI had said the banking sector remains resilient and stable, ending speculation of potential risk to lenders from their exposure to the crisis-ridden Adani group.

The Adani group plunged into a crisis after a research report by US-based short seller Hindenburg alleged of gaps in the group’s financials, high debt burden and risk of overvaluation, leading to a carnage in the shares of group companies.

Adding to the woes, the steep fall in share price forced Adani group to cancel its proposed Rs 20,000 crore follow-on share sale.

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Subsequently, concerns arose as reports said a number of large Indian banks have both fund and non-fund based exposure to the group, which a CLSA report estimate to be 38 percent of the total debt of the firm.

That apart, bonds/commercial papers constitute 37 percent, 11 percent is borrowing from financial institutions and the remaining 12-13 percent is inter-group lending, the report said.

The RBI statement came shortly after country’s largest lender State Bank of India (SBI) dismissed any concerns due to its Rs 27,000 crore exposure to Adani group, saying this constitutes less than 0.9 per cent of the loan book.

“As per the Reserve Bank’s current assessment, the banking sector remains resilient and stable,” the RBI said in the statement released on February 3 evening. Typically, the RBI issues such statements to calm stakeholders when banking system is gripped with fears of a potential liquidity crisis following certain events.

Making a tangent reference to the Adani Group, the RBI said it is monitoring the exposure of Indian banking sector to a “certain business conglomerate”.

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