Finance Minister Nirmala Sitharaman has said that regulators Sebi and RBI should always be on their toes to keep the equity market stable and indicated.
That the Adani stock rout following a Hindenburg report was a company specific issue. She said banks and insurance companies are “not overexposed” to any one company and assured that Indian markets are very well managed by its regulators.
“Yes, there have been occasional blips in the market, maybe small or big, but they do address issues like that. And I strongly believe that our regulators are seized of this matter,” Sitharaman said in an interview to Times Now.
Adani Group stocks are witnessing a meltdown on the bourses after the US-based short-seller Hindenburg Research made a litany of allegations in a report, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.
The Adani group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.
Hindenburg released the report on January 24 — the day on which Adani Enterprises’ ₹20,000-crore follow-on share sale opened for anchor investors, while the allegations have been rejected by the conglomerate.
Though the follow on public offer (FPO) was over-subscribed, the Adani group decided to scrap the FPO.
“I don’t want to have any view on it except that the regulators should act, act in time, and act to keep the market stable, act to keep India’s regulatory functions at its best, whether it is the Reserve Bank, or SEBI. Sitting in the Finance Ministry, my view would be that the regulators should be always on their toes. And that is where I would comment on what’s got to be done,” Sitharaman said.
The Minister was replying to a question on whether the Adani group stock rout was just a market activity, or this has happened for just one stock. The stock price of Adani Enterprises fell by over 70 per cent from its peak of ₹4,190 in December, last year.
Since January 24, the BSE Sensex has slumped by over 1,000 points largely driven by sell off in Adani group stocks. Asked if the Adani issue is just a company problem, Sitharaman said: “I would think so”.
The Minister said she did not see any impact of the Adani issue on the fund flow into India. “… The last few days India has received more than (USD) eight billion. Our forex reserves have gone up by (USD) eight billion in the last few days”.
Sitharaman said banks and insurance companies, which have exposure to Adani group, are themselves speaking, and covering every aspect of what is worrying people, and disclosing their exposure.
“They are not overexposed to any one company. You are hearing it from the horse’s mouth,” Sitharaman said.
Amid concerns over banks’ exposure to the crisis-ridden Adani Group, the Reserve Bank had on February 3, issued a statement saying that India’s banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.
Similarly, stock market regulator Sebi on Saturday said it is committed to ensuring the stock market’s integrity and all necessary surveillance measures are in place to address any excessive volatility in individual shares.
Without naming Adani group specifically, the capital markets watchdog said in a statement that unusual price movement in the stocks of a business conglomerate has been observed in the past week.
The 10 listed Adani group firms have faced a combined erosion of over ₹8.5 lakh crore in just six trading sessions.
Several Opposition leaders and some experts have been raising questions about Sebi not acting in the Adani matter, while Parliament proceedings have also got disrupted on this issue for two days.
Stock exchanges BSE and NSE have put three Adani group companies — Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements — under their short-term additional surveillance measure (ASM), which basically means that intra-day trading would require a 100 per cent upfront margin and is aimed at curbing speculation and short-selling in these stocks.