As the Hindenburg-Adani controversy continues, the National Stock Exchange of India and the Bombay Stock Exchange have placed the three group companies under their short-term Additional Monitoring Measures (ASM) framework. The development came even as S&P Dow Jones said it would remove Adani Enterprises from sustainability indices and NSE on Friday placed two shares of Adani Group under futures and options (F&O) restrictions.
The group has lost $120 billion in market value since then. Hindenburg The report made several allegations including fraud and rigging of share prices. Adani Group However insists that the allegations are baseless, and that it complies with all laws and disclosure requirements.
What is asm framework?
The ASM or ‘Additional Supervisory Measures’ framework is a pre-emptive measure taken to ‘enhance market integrity and protect the interests of investors’. Both BSE and NSE have taken this step as per the data available with the exchanges on Thursday.
Simply put, stocks will now be subject to greater scrutiny and restrictions. Their listing under ASM is a kind of warning to the investors about the unusual price movement. They cannot be pledged and are also forbidden from intraday leverage such as cover orders and bracket orders. Measures such as reduction in price bands, periodic call auctions, and transfer of securities in the trade for trade segment may also be applicable from time to time.
The parameters for shortlisting securities under ASM include high-low variation, client concentration, number of price band hits, near-to-near price variation and price-earnings ratio. The move is not intended as an adverse action against the concerned company or entity and is purely due to market surveillance.
Which Adani companies have been placed under the ASM framework?
NSE has placed Adani Enterprises, Adani Ports And special economic zone and Ambuja Cements under their short-term additional monitoring measures framework.
What does this mean for these Adani companies?
NSE and BSE have stated that these three companies fulfill the criteria for inclusion in short term ASM.
“The applicable rate of margin will be 50% or the existing margin whichever is higher, subject to a maximum rate of margin of 100%, which will be applicable on all open positions from February 6, 2023 to February 3, 2023 and new positions created from February 6. , 2023,” the exchanges said under the short term asm.
Market experts believe that putting in this framework would mean 100% upfront margin requirement for intra-day trading.
How long can short term ASM last?
According to the FAQ sheet uploaded on the official website of BSE, “The stock will be implemented for a minimum period of 5/15 trading days in each phase and will be eligible for review from the 6th/16th trading day.”
If the stock does not meet the entry criteria on the review date, it can be taken out of the short term ASM framework.
(with inputs from agencies)
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