Adani stocks take a major beating, expert tells investors to be cautious

NEW DELHI: Stocks of Adani group companies fell as much as 25 per cent on Monday after reports emerged that the National Securities Depository Limited (NSDL) has frozen the accounts of three Mauritius-based funds that own over Rs 43,500 crore worth of shares in four Adani firms. Besides, market regulator Sebi is reportedly investigating whether there has been price manipulation in Adani Group stocks, which have risen between 200 and 1,000 percent in the last year.

The share price of the flagship Adani Enterprises crashed by as much as 25 per cent to Rs 1,201 against the previous close of Rs 1,601.45 on BSE during the day.  However, it recovered from its lowest intra-day trading point and closed 5.10 per cent lower at Rs 1,510. To note, Adani Enterprises has risen 830 per cent in one year and 196 per cent since the beginning of this year. 

Similarly, Adani Ports and Special Economic Zone plummeted 18.75 per cent to Rs 681.50 on the BSE on Monday. Like the flagship, it also recovered from the lows but lost 9.26 per cent of its value. 

Adani Green Energy fell 5 per cent to Rs 1,165.35, Adani Total Gas dipped 5 per cent to Rs 1,544.55, Adani Transmission declined 5 per cent to Rs 1,517.25 and Adani Power slumped 4.99 per cent to Rs 140.90. These stocks hit their respective lower circuit limits on Monday. 

According to reports, NSDL has frozen the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund, which together own more than Rs 43,500 crore worth of shares in Adani Enterprises, Adani Green Energy, Adani Transmission and Adani Total Gas. NSDL later clarfied that satus of demat accounts of Albula Investment Fund, Cresta Fund & APMS Investment Fund are held in 'active' status in NSDL system.

The three entities in question are registered at the same address in Port Louis, Mauritius and do not have websites. These funds together hold 6.82 percent in Adani Enterprises, 8.03 percent in Adani Transmission, 5.92 percent in Adani Total Gas and 3.58 percent in Adani Green. 

Adani Group in a filing said that reports of these three foreign accounts being frozen are blatantly erroneous and are being circulated to deliberately mislead the investing community.

"This is causing irreparable loss of economic value to the investors at large and reputation of the group. Given the seriousness of the article and its consequential adverse impact on minority investors, we requested Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and have their written confirmation vide its e-mail dated 14th June, 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not  frozen," it said in a regulatory filing. 

Despite the denial, an expert urged caution when it comes to investing in Adani group stocks. 

"As per market news from various quarters, some of the mutual funds are holding very large quantities of Adani groups stocks and some complaints have been filed with SEBI also. From today, four Adani group stocks have been shifted to T2T (Trade 2 Trade) which  means that intraday trading will not be permitted and investors need to take/give holding for any trade. We suggest investors be cautious on Adani group stocks, trading at very high valuations compared to peers. Buy on dips or averaging the buy position should be avoided for the time being," said Yash Gupta Equity Research Associate at Angel Broking.