Adani Enterprises witnessed the biggest fall eroding 76% of the wealth since December
Adani Enterprises’ share price saw a fresh low on February 3, plunging 35 percent in morning trade, a day after it was placed under additional surveillance measures on the national stock exchange.
At 10:41 am, the stock fell touches 35 percent to Rs 1,017.45 apiece on the NSE. This is the worst intraday stock drop ever. The stock has erased 76 percent of its value from its high of Rs 4,190 in December 2022.
In the F&O segment, call and put writers also steadily moved their positions lower; The 1100 and 1200 strikes were most active while the higher strikes were unfolding.
Since the publication of the Hindenburg Report on January 24, the Adani group has wiped out around $117 billion in market capitalisation, one of the worst on record. This is almost half of the group’s total market value.
What happened on January 24th?
Short-seller Hindenburg Research said it holds short positions in Adani Group companies through US-traded bonds and non-Indian-traded derivatives.
“Key Adani listed companies have taken on significant debt, including pledging shares of their inflated shares for loans, putting the whole group on shaky financial footing,” Hindenburg said.
It also accused the group of manipulating shares and using a tax haven, which the conglomerate denied in a 413-page rebuttal to the allegations.
What about FPO?
Despite the news and subsequent share price volatility, Adani Enterprises’ Rs 20,000 crore follow-on initial public offering (FPO) was 112 percent subscribed, led by non-institutional investors and qualified institutional buyers (QIBs).
On February 1, the FPO was revoked by the company’s board of directors on February 1. “The board of the company felt that it would not be morally right to proceed with the matter. The interest of the investors is paramount and therefore to insulate them from any potential financial loss, the board has decided not to proceed with the FPO,” said group chairman Gautam Adani.
What is ASM and what happens next?
Buoyed by volatility, the NSE placed Adani Enterprises, Adani Ports, and Ambuja Cements under Additional Scrutiny Measures (ASM) on February 2.
In its circular, it stated that the margin rate applicable would be 50% or the existing margin, whichever is higher, subject to a maximum rate of margin limited to 100% w.e.f. February 6, 2023, on all open positions as of February 3 and new positions created since February 6.
Adani Ports and Ambuja Cements are on the F&O ban list for February 3. The stock fell 5-6 percent, a relatively smaller fall than Adani Enterprises
