Hot Adani stocks turn freezing cold

Adani Group companies shares fell between 5 per cent and 25 per cent intraday on news that tthe National Securities Depository Ltd (NSDL) has frozen accounts of three foreign portfolio investors’ (FPIs), which own over Rs

43,500 crore worth of shares in four of the group’s firms.

According to reports, the market-cap of Adani Group Companies took a

$6-billion hit after media reports emerged about the suspension.

Group flagship Adani Enterprises lost 25 per cent as shares plunged to a low of Rs 1,201.10 on the BSE compared to the previous close at Rs 1,601.45. Later the stock recovered most of the day's losses to close at Rs 1,501.25, still down 6.26 per cent.

Adani Ports & Special Economic Zone ended the day with a loss of 8.3 per cent at Rs 768.70, after plunging 18.75 per cent to a low of Rs 681.50, compared to the previous close at Rs

838.80.

Adani Power and Adani Transmission closed 4.99 per cent and 5 per centlower, respectively, as both stocks hit the 5 per cent lower circuit and remained locked till the close of the market.

Adani Green Energy, which has risen sharply since August last year and commands a higher market cap than even Adani Enterprises at Rs 1,83,920 crore, fell 4.13 per cent.

Adani Total Gas fell 5 per cent and hit the lower circuit and was locked in the lower circuit till day's end. It has also risen sharply since mid-October and commands a market cao of Rs 1,69,871.17 crore.

Reports said that NSDL has frozen the accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund due to insufficient disclosure of information regarding beneficial ownership.

The funds are based out of Mauritius and registered at the same address in Port Louis and the frozen accounts, as of May 31, won’t be able to sell or buy new securities, reports said.

However, the Adani Group said it has written confirmation that accounts of three foreign funds that are among its top shareholders are not frozen and reports to the contrary are "blatantly erroneous and misleading". In identical filings to the stock exchange, some group companies said, "This is causing irreparable loss of economic value to the investors at large and reputation of the group."

A sharp rally in the shares of Adani Group companies had added over $40 billion to the wealth of Gautam Adani this year.

The quick surge in these stocks, largely held by overseas funds and with very little public float, had also led some analysts to flag the risks involved.

The group’s stocks, especially Adani Total Gas, Adani Enterprises and Adani Transmission. “look extended,” Bloomberg Intelligence analysts Gaurav Patankar and Nitin Chanduka wrote in a June 10 note after analyzing technical indicators.

“Among the biggest foreign investors are a few Mauritius-based funds holding over 95% of assets in these companies,” the analysts wrote. “Such concentrated positions, along with negligible onshore ownership, create asymmetric risk-reward as large investors conspicuously avoid Adani,” they said.