In an era of social media snippets, “clean chit” posts can move markets. In Adani’s case, it was no surprise that the group’s shares took a hit after the May 6 report by an expert panel appointed by the Supreme Court of India to probe them was based on three allegations made by short-seller Hindenburg. Volatility was found to have no regulatory wrongdoing in terms of: that it held its listed firms more closely than allowed by law, that it hid related-party deals and that it manipulated its stock prices. While these were denied by Adani, the group’s market value has contracted sharply since pointing those fingers this January, despite this week’s gains. The let-off of the panel’s report was for the Securities and Exchange Board of India (SEBI) in its supervisory role, but it has perhaps been taken by market participants as an indication of SEBI’s own Adani probe, when due for submission this August. have something to add till the time of presenting its findings. However, both the complexity of the matter and the dramatic rise in Adani’s share prices – with some peaking at triple-digit multiples of earnings in the three odd years prior to the Hindenburg crash – cast a shadow over what the report said. Need to take a look.
Whether any rule violation is noticed by SEBI depends on what is being monitored. As per the panel’s report, SEBI had disclosed the beneficial owners of entities that held a majority of Adani’s shares issued by most of the publicly listed firms (at least one of the firms A quarter of the equity pie is our free-float norm), but no anti-regulation relationship could be detected. Since investors, rather than fund owners, may be in control behind a screen, SEBI also chased a mark of 42 whose money was in the know. That hunt happened before this year’s volatility, but has been mired in obscurity. This will be a difficult task to do, it is believed, because there is so little data to go through. In 2019, SEBI eased a rule on ultimate asset holders, on which the regulator reportedly “hit a wall.” As such the identity must be unmasked for proof of any secret ownership by the promoters, let alone secret fund flows and direct stock. puppet, which meant that no progress could be made. By implication, as far as SEBI’s official scanners are concerned, without evidence to the contrary, Adani’s public holding was in the hands of people over whom the group had no control. Of course, the group itself has averaged just as much over a long period of time. But neither side’s claims have been put to the kind of test from which any conclusions can be drawn. In fact, the report noted its lack of access to potential investigative leads and suggested that pooled investigative-agency resources should normally be devoted to such cases. From this we can infer some dissatisfaction with the present system.
While the final word on the matter seems further away than last week, ahead of May 6, its political context adds to another surge in Adani shares. After all, what is a hot-button poll issue for the Congress – which has pushed for a joint parliamentary probe – is also a hot potato for the same reason, with the opposition party trying to portray Adani as close to the ruling dispensation. Used to be. All told, this week’s relief rally reflects a mix of investor sentiments, as every market must for price discovery to do its job. Ironically, this process is at the root of a stock-market controversy: whether demand and supply were acting independently, given all the facts and forecasts, when Adani’s shares were last rising. An answer so important as to justify SEBI staring at the wall it is said to be about.
catch all business News, market news, today’s fresh news events and Breaking News Update on Live Mint. download mint news app To get daily market updates.