NSE puts three Adani Group companies under ASM framework amid Hindenburg row - What does this mean?
2 min read . Updated: 03 Feb 2023, 03:14 PM IST
PremiumThe National Stock Exchange of India and the Bombay Stock Exchange recently put Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements under its short-term additional surveillance measure frameworks.
As the Hindenburg-Adani row continues, the National Stock Exchange of India and the Bombay Stock Exchange has put three of the group's companies under its short-term additional surveillance measure (ASM) framework. The development came even as S&P Dow Jones said it would drop Adani Enterprises from sustainability indices and the NSE put two Adani Group stocks under a futures and options (F&O) ban on Friday.
The group has incurred a $120 billion loss in market value since the Hindenburg report levelled a litany of charges - including fraud and share price manipulation. The Adani Group however insists that that allegations are baseless, and that it complies with all laws and disclosure requirements.
What is an ASM framework?
ASM or ‘additional surveillance measure’ framework is a pre-emptive measure taken to enhance ‘market integrity and safeguard the interest of investors’. Both the BSE and NSE have taken this step as per data available with the exchanges on Thursday.
Simply put, the stocks will now be subject to greater scrutiny and restrictions. Their listing under ASM is a warning of sorts for investors about unusual price movement. They cannot be pledged and are also forbidden from intraday leverages like cover orders and bracket orders. Measures such as reduction in price band, periodic call auction, and transfer of securities to Trade for Trade segment from time to time can also apply.
The parameters for shortlisting securities under ASM include high-low variation, client concentration, number of price band hits, close-to-close price variation and price-earning ratio. The move is not intended as adverse action against the concerned company or entity and is purely on account of market surveillance.
Which Adani companies have been put under ASM framework?
The NSE has put Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements under their short-term additional surveillance measure framework.
What does it mean for these Adani companies?
The NSE and BSE have said that these three companies satisfied the criteria for inclusion in short-term ASM.
“Applicable rate of margin shall be 50% or existing margin whichever is higher, subject to maximum rate of margin capped at 100%, with effect from February 6, 2023 on all open positions as on February 3, 2023 and new positions created from February 6, 2023," the bourses said under the short-term ASM.
Market experts believe that putting in this framework means intra-day trading would require 100% upfront margin.
How long can short term ASM last?
According to an FAQ sheet uploaded to the official BSE website, “The stocks shall be retained in each stage as applicable for a minimum period of 5/15 trading days and shall be eligible for review from 6th/16th trading day onwards."
A stock can be moved out of the short term ASM framework if it does not meet the entry criteria on the review date.
(With inputs from agencies)
