Adani’ stock rout a company specific issue: Nirmala Sitharaman

The regulators should act, act in time & act to keep the market stable, act to keep India's regulatory functions at its best, whether it is the Reserve Bank, or SEBI

Nirmala Sitharaman Adani

New Delhi: Union finance minister Nirmala Sitharaman on Sunday said that banks and insurance companies are ‘not overexposed’ to any one company (including Adani Group) and Indian markets are very well managed by its regulators.

“Yes, there have been occasional blips in the market, maybe small or big, but they do address issues like that. And I strongly believe that our regulators are seized of this matter,” said Sitharaman in a television interview regarding the stock market’s dive in the wake of Hindenburg Research’s report on Adani Groups’ trade.

Also Read: Adani group calls off FPO, set to return proceeds to investors

Adani Group stocks faced a continued slide after the US-based Hindenburg Research alleged that the group made fraudulent transactions and share price manipulation at the Gautam Adani-led companies. However, the Adani group dismissed the charges as lies, saying it complies with all laws and disclosure requirements.

Hindenburg released the report on January 24, when Adani Enterprises’ ₹20,000-crore follow-on public offer (FPO) was opened for anchor investors. The FPO was later withdrawn and the collection reportedly returned to the investors.

“I don’t want to have any view on it except that the regulators should act, act in time, and act to keep the market stable, act to keep India’s regulatory functions at its best, whether it is the Reserve Bank of India, or SEBI. Sitting in the finance ministry, my view would be that the regulators should be always on their toes. And that is where I would comment on what’s got to be done,” Sitharaman said.

Also Read: Adani Group companies’ shares continue to bleed on BSE

The minister was replying to a question on whether the Adani group stock rout was just a market activity, or this has happened for just one stock.

The stock price of Adani Enterprises fell by over 70% from its peak of ₹4,190 in December, last year.

Asked if the Adani issue is just a company problem, Sitharaman said: “I would think so”. She further said she did not see any impact of the Adani issue on the fund flow into India. “… The last few days India has received more than (USD) eight billion. Our forex reserves have gone up by (USD) eight billion in the last few days”.

Also Read: Adani acquires Ambuja & ACC, becomes 2nd largest cement player

Sitharaman said banks and insurance companies, which have exposure to Adani group, are themselves speaking, and covering every aspect of what is worrying people, and disclosing their exposure. “They are not overexposed to any one company. You are hearing it from the horse’s mouth,” she added.

Amid concerns over banks’ exposure to the crisis-ridden Adani Group, the Reserve Bank had on February 3, issued a statement saying that India’s banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.

Similarly, stock market regulator Sebi on Saturday said it is committed to ensuring the stock market’s integrity and all necessary surveillance measures are in place to address any excessive volatility in individual shares.

Also Read: HDFC Mutual Fund announces launch of new Beta ETFs

Without naming Adani group specifically, the capital markets watchdog said in a statement that unusual price movement in the stocks of a business conglomerate has been observed in the past week. Notably, the ten listed firms of Adani group have faced a combined depletion of over ₹8.5 lakh crore in just six trading sessions.

Stock exchanges BSE and NSE have put three Adani group companies—Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements—under their short-term additional surveillance measure (ASM), which basically means that intra-day trading would require a 100% upfront margin and is aimed at curbing speculation and short-selling in these stocks.

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