As the Adani rout continues to affect the market, eroding billions of dollars in wealth, the NSE (National Stock Exchange) put seven Adani Group stocks under the Additional Surveillance Mechanism. Adani Enterprises, Adani Green Energy, Adani Ports and SEZ, Adani Transmission, Adani Total Gas and Ambuja Cements are placed under the short-term ASM framework, while Adani Power is placed under the long-term ASM framework.
An underwriter for Adani Enterprises’ Rs 20,000 crore FPO, Monarch Networth Capital was placed under the short-term ASM framework as well. Monarch Networth Capital was also implicated in Hindenburg Research’s report which accused the Adani Group of fraud. ACC and Adani Wilmar are two Adani Group shares that have not been placed under increased surveillance.
Adani Enterprises shares tanked 10% to hit the lower circuit in the morning trade, falling further 34.9% to hit an intraday low of Rs 1017.1 on BSE. The sharp fall in the share price for three consecutive sessions comes after the conglomerate canceled its Rs 20,000 crore FPO. Adani Ports, Adani Transmission, and Adani Green Energy shares fell 10% while Adani Power, Adani Total Gas, and Adani Wilmar shares hit 5% lower circuit.
What is ASM?
SEBI and the exchanges introduced ASM to “alert and advise investors to be extra cautious when dealing in these securities” according to an NSE circular. The securities are shortlisted to be placed under ASM covering the following parameters:
- High Low Variation
- Client Concentration
- Close to Close Price Variation
- Market Capitalization
- Volume Variation
- Delivery Percentage
- No. of Unique PANs
Certain trading restrictions are imposed on stocks that fall under the framework. “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,” said NSE on the actions under the short-term ASM framework. This seeks to deter traders from taking excessive risks and reduce volatility, since the liquidity will come down.
Adani Group stocks: Buy, sell or hold?
Experts believe the current rout as a result of the Adani-Hindenburg faceoff will end soon. “The ‘Adani stocks crisis’ also has contributed to the negative sentiments. Investors may wait and watch for the dust to settle. The Adani crisis impact is slowly diminishing,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services
“There is no denying that the share prices of the Adani Group were overvalued. But even though all Adani stock fell following the Hindenburg report, it doesn’t mean that one should not invest in it. Adani is India’s biggest airport operator and also controls Mundra Port, India’s largest, in his home state of Gujarat. Adani became India’s second-largest cement producer in 2022, after acquiring Swiss firm Holcim’s Indian assets for $10.5 billion. Now the Adani shares are approaching fair value, and it will be a great opportunity to invest for the long term,” said Rameshver Dongre, Research Analyst – Equity Research, CapitalVia.
“Currently all the Adani group stocks are very heavily oversold on the Daily charts. Investors should avoid buying till we end up with at least 2 green candles on the Daily charts. Adani Enterprises will now have support at Rs 1035, Adani Ports will have support at Rs 347 and Ambuja Cements support will be at Rs 298.5,” said A R Ramachandran, Co-owner, Tips2trades.