Adani Stock Crash: SEBI Says Its Surveillance Measures in Place To Handle 'Excessive' Volatility
Moneylife Digital Team 04 February 2023
Investor Interest Exclusive

Reacting for the first time to the stock price crash of Adani group companies, market regulator Securities and Exchange Board of India (SEBI) says it seeks to maintain the orderly and efficient functioning of the market and has put in place a set of well-defined, publicly available surveillance measures to address excessive volatility in specific stocks. Earlier in the day, finance minister Nirmala Sitharaman also commented on the Adani group crash, saying India's macro fundamentals and image are not affected by this and that it the country's perception remained intact.

In a release, SEBI says, "During the past week, unusual price movement in the stocks of a business conglomerate has been observed. As part of its mandate, SEBI seeks to maintain the orderly and efficient functioning of the market and has put in place a set of well-defined, publicly available surveillance measures (including the additional surveillance measure -ASM framework) to address excessive volatility in specific stocks. This mechanism gets automatically triggered under certain conditions of price volatility in any stock."

"Further, in all specific entity-related matters, if any information comes to SEBI's notice, then, as per extant policies, the same is examined and after due examination, appropriate action is taken. SEBI has consistently followed this approach on entity-level issues and would continue to do so in future as well," it added.

The market regulator says it is committed to ensuring market integrity and to ensuring that the markets continue to have the appropriate structural strength to function in an uninterrupted, transparent and efficient manner, as has been the case so far.

According to SEBI Indian financial market, as represented by Sensex and Nifty, has demonstrated ongoing stability and is continuing to function in a transparent, fair and efficient manner. "On a longer-term basis also, Indian markets have been viewed positively by investors. A cross-country comparison of dollar-adjusted market returns with both peer and developed countries, during the past 3 years till date, places the Indian market as a positive outlier."

Earlier in the day, addressing media persons in Mumbai, Ms Sitharaman, the FM, says India's macroeconomic fundamentals and the image of the economy none of it has been affected (by the Adani group crash). "The fact that we have had US$8bn (billion) of foreign exchange reserve growth during last two days shows that perception of India and its inherent strength is intact."

Commenting on the withdrawal of follow-on public offering (FPO) by Adani Enterprises Ltd, the flagship of Adani group, the finance minister asked, "How many times have FPOs not withdrawn from this country and how many times has the image of India been suffering because of that and how many times have FPOs not come back?"

"There are fluctuations in every market, but the accretion over the last few days establishes the fact that the perception of both India and its inherent strengths is intact," she added.

On Friday, allaying concerns over Indian banks' exposure to the Adani group, the Reserve Bank of India (RBI), without naming, clarified that the banking sector remains resilient and stable as per its current assessment.
 
In a statement, RBI says, "There have been media reports expressing concern about the exposures of Indian banks to a business conglomerate. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the large exposure framework (LEF) guidelines issued by the RBI."

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