NDTV gains after SAT quashes Sebi order against Roys

NDTV shares have underperformed Nifty Media and benchmark Nifty 50 so far this year, falling 36%

NDTV shares traded almost a percent higher on October 6 morning, a day after the Securities and Appellate Tribunal (SAT) quashed the insider trading order against former promoters of the media company Prannoy Roy and Radhika Roy.

In November 2020, the Securities and Exchange Board of India (SEBI) investigated two complaints against the then promoters of NDTV, which has since been acquired by the Adani group. While one involved loans taken from Vishvapradhan Commercial Pvt Ltd, the other was a case of insider trading.

Sebi imposed a ban of two years on Prannoy Roy and wife Radhika Roy and restrained them from accessing the capital market.

Also Read | SAT quashes Sebi order against NDTV founders Prannoy Roy, Radhika Roy

SEBI said the Roys together bought 4.83 lakh shares of NDTV on December 26, 2007 for Rs 19.34 crore. By dealing in shares of NDTV, while in possession of unpublished price-sensitive information, the Roys violated the provisions of insider trading, the market regulator said.

In its order, SAT said the trades by Roys were during PSI-6, a reference to information that had been considered price sensitive by SEBI. "In Quantum Securities (Supra) we have already held that PSI-6 was not a price sensitive information and, therefore, the charge of insider trading during that period cannot be sustained," it said.

The tribunal said the Roys sold their shares on April 17, 2008 when the trading window was closed and, therefore, “violated NDTV’s Code of Conduct and the provisions of Regulation 12(2) read with Regulation 12(1) of the PIT Regulations, 1992”.

But since it was held in Quantum Securities that PSI-6 was not a price-sensitive information and NDTV founders were not insiders, "the question of violating the NDTV’s Code of Conduct for trading during the window closure period becomes immaterial", the tribunal said.

Roys' trades in conformity with CoC, regulations

SAT said the Roys had secured pre-trade clearance from the Compliance Officer of NDTV and "the trades executed by the two entities was in conformity with the NDTVs Code of Conduct and the PIT Regulations", it said.

The Adani group, which held 37 percent percent stake, gained full control of NDTV after acquiring most of the shares of the Roys in Late December 2022.

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Share performance, technicals

The stock has underperformed the Nifty Media and the benchmark Nifty this year, falling 36 percent, compared to 13.7 percent rise in the Nifty Media and 7 percent in the Nifty.

In the last six months, the stock has risen 10 percent. The counter took a hit earlier this year in the aftermath of the Hindenburg report, which accused the Adani group of share manipulation, a charge denied by the conglomerate.

The relative strength index (RSI) of the stock stands at 49.7, implying that it's trading neither in the overbought nor in the oversold territory.

Its one-year beta is 1.58, implying very high volatility. The stock is trading above its short-term averages but below 50, 100 and 200-day moving averages, according to Trendlyne data.

At 11.31 am, the stock trading at Rs 214.60 on NSE, down 0.4 percent from the previous close.

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