Adani Group’s 2 stocks placed under ASM stage-1 category: Here’s what it means for shareholders
- Adani Green Energy and Adani Energy Solutions have been put under the first stage of the short-term additional surveillance measures (ASM stage-1) on BSE and NSE.
Adani Group stocks - Adani Green Energy and Adani Energy Solutions, have been put under the first stage of the short-term additional surveillance measures (ASM stage-1) on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) after the recent US indictment of Chairman Gautam Adani and his nephew Sagar Adani on alleged bribery and fraud charges.
ASM is an initiative by the capital markets regulator Securities and Exchange Board of India (SEBI) and the stock exchanges in which securities are moved to either a short-term or long-term framework to protect investors' interests. The two Adani Group stocks have been put under the ASM framework due to their high volatility and rapid movement in trade after the bribery charges.
Also Read: Adani group stocks surge up to 16% post clarification by Adani Green; Adani Total Gas top gainer
Adani Group stocks under ASM stage-1: What does it mean for shareholders?
ASM is an initiative to enhance market integrity and safeguard investors' interests. When a stock is placed under the ASM framework, traders cannot use intraday leverage, and its 100 per cent traded value is blocked as a margin. This checks risky and speculative trades, thus minimising the loss.
Pledging of stocks under the ASM category is not allowed. If a pledged stock is moved under ASM, collateral margins will no longer be provided, and the collateral value will be reduced by the value of collateral received against the stock. The stocks can either be unpledged or kept pledged without the collateral margins until they are moved out of ASM.
In the short-term ASM, there are two stages. Stocks are retained in each stage as applicable for a minimum of 5/15 trading sessions and are eligible for review from the 6th/16th trading day onwards. The securities are further monitored and moved in trade-to-trade (T2T Segment), and 100 per cent of traded value will get blocked as margins, meaning no intraday leverage is given.
SEBI and exchanges use the ASM framework to shortlist securities. The parameters for shortlisting securities include high-low variation, client concentration, number of price band hits, close-to-close price variation, and price earning ratio.
According to BSE, the ASM framework is in conjunction with all other prevailing surveillance measures imposed by the exchanges occasionally and as applicable. "The shortlisting of securities under ASM is purely on account of market surveillance and should not be construed as an adverse action against the concerned company," said BSE.
SEBI and exchanges have been introducing various enhanced pre-emptive surveillance measures. "These measures include a reduction in price band, periodic call auction, transfer of securities to Trade to Trade category, Graded Surveillance Measure, and Additional Surveillance Measure Framework from time to time," said BSE.
Adani Group stocks after US bribery indictment
Adani Group stocks have been extremely volatile in trade since the alleged bribery charges were announced against the ports-to-power conglomerate. On Wednesday, Adani Green Energy's share price skyrocketed and gained up to 10 per cent, and Adani Energy Solutions also zoomed 10 per cent. The rebound came after Adani Green Energy's clarification regarding the bribery charges.
Adani Green Energy said in a regulatory filing to the exchanges, “Gautam Adani, Sagar Adani, and Vineet Jain have not been charged with any violation of the FCPA (United States Foreign Corrupt Practices Act) in the counts outlined in the indictment of the US DOJ (Department of Justice) or civil complaint of the US SEC (Securities and Exchange Commission)”.
"These directors have been charged on three counts in the criminal indictment, namely (i) alleged securities fraud conspiracy, (ii) alleged wire fraud conspiracy, and (iii) alleged securities fraud," said Adani Green Energy.
This came days after Adani Group stocks crashed as much as 24 per cent after the US SEC indicted Adani and his nephew in the alleged bribery and fraud case. The sharp selloff in the group stock wiped out over ₹2 lakh crore from the Adani Group's overall market capitalisation (m-cap) on November 21.
Gautam Adani was allegedly indicted in New York, US, over his role in a multibillion-dollar bribery and fraud scheme. According to US authorities, Gautam Adani, chairman of the ports-to-power conglomerate and seven other defendants agreed to pay Indian officials over $250 million in bribes to obtain solar contracts.
Adani and his nephew Sagar are accused of orchestrating the scheme to ensure a solar energy project and misleading investors during a $750 million bond offering, which raised about $175 million from US investors. Adani Group has since denied the allegations and said it will seek all possible legal recourse.
"The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green are baseless and denied," it said. "The Adani Group has always upheld and is steadfastly committed to maintaining the highest standards of governance, transparency and regulatory compliance across all jurisdictions of its operations. We assure our stakeholders, partners and employees that we are a law-abiding organisation, fully compliant with all laws," it added.
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