Stocks of Adani group companies took a beating in the morning trade on June 14 after reports of the National Securities Depository Ltd NSDL freezing three Foreign Portfolio Investors' (FPIs) accounts that own shares in four of the listed Adani firms emerged.
NSDL has frozen the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund, which together own more than Rs 43,500 crore worth of shares in Adani Enterprises, Adani Green Energy, Adani Transmission and Adani Total Gas. As per the depository's website, these accounts were frozen on or before May 31, an Economic Times report said.
An account freeze means the funds would not be able to sell any of the existing securities nor buy any new securities.
Moneycontrol could not independently verify the story.
Though the reason for the freezing of the accounts is not known, the Economic Times cited top officials at custodian banks and law firms handling foreign investors as saying that it could be because of insufficient disclosure of information regarding beneficial ownership as per the Prevention of Money Laundering Act (PMLA).
As per the business daily, all these three entities are registered at the same address in Port Louis, Mauritius and do not have websites. These funds together hold 6.82 percent in Adani Enterprises, 8.03 percent in Adani Transmission, 5.92 percent in Adani Total Gas and 3.58 percent in Adani Green. Adani Group has six listed companies. The other two are Adani Ports and Adani Power.
As a result, Adani Group stocks including Adani Green, Adani Transmission and Adani Gas hit lower circuit on NSE down 5 percent each. Adani Enterprises declined fell 20 percent.
"As per the different market news some of the mutual funds are holding very large quantities of Adani groups stocks and some complaints have been filed with SEBI also. From today four Adani group stocks have been shifted to T2T (Trade 2 Trade) which means that intraday trading will not be permitted and investors need to take/give holding for any trade. We suggest investors be cautious on Adani group stocks, trading at very high valuations compared to peers. Buy on dips or averaging the buy position should be avoided for the time being, said Yash Gupta Equity Research Associate at Angel Broking.
Also, Sebi is reportedly investigating whether there has been price manipulation in Adani Group stocks, which have gained between 200 and 1,000 percent in the last one year.Later in the day, Adani Group issues a statement terming the media report as erroneous.
"Given the seriousness of the article and its consequential adverse impact on minority investors, we requested Registrar and Transfer Agent, with respect to the status of the Demat Account of the aforesaid funds and have their written confirmation vide its e-mail dated 14 June 2021, clarifying that the Demat Account in which the aforesaid funds hold the shares of the Company are not frozen," it added.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.