Tuesday, May 21, 2024

Adani stocks crash on fear banks hold collateral

Mumbai: Adani group stocks plunged the most by value in 23 sessions after a report in The Ken cited regulatory filings to show that banks have not released a significant portion of promoter shares held as collateral. This means the group’s debt hasn’t been fully paid off, against its claims of repaying $2.15 billion in share-backed debt.

Group flagship Adani Enterprises Ltd informed exchanges that NSE had sought a “clarification” from it with respect to the report. The company’s response to Mint’s queries was pending until press time, but group CFO Jugeshinder Robbie Singh reacted to the Ken report on Twitter. “Deliberate misrepresentation (and if i speculate out right lies) of @TheKenWeb(@SudzzBTS and @nimishshp) they know that relevant exchanges will update end of quarter. The deliberate subterfuge will be clear to all once exchanges update the data post end of quarter,” he tweeted.

The market cap of 10 listed group companies crashed by 50,298 crore, the most since 22 February, when 51,615 crore of investor wealth was wiped out. The losses were led by Adani Enterprises, which fell 7%, and Adani Ports, which fell almost 6%. Adani Transmission, Adani Power, Adani Green and Adani Total Gas closed at the 5% lower circuit.

“The price volatility was on the back of the news report,” said Rajesh Baheti, managing director of Crosseas Capital. “However, while the volatility could persist, the stocks could stabilize soon, given that implied volatility hadn’t shot up (in Adani Enterprises) the way it had last month,” he added. Implied volatility (IV) in options contracts is a measure of traders’ anticipation of price swings—higher the IV, more the uncertainty. After the Hindenburg report, which resulted in Adani Enterprises withdrawing its 20,000 crore follow-on public offer after its conclusion last month, the IV shot up to 110 plus, Baheti said. On Tuesday, the put option IVs hovered around 80-90, which he said was high but not as steep as seen in the recent past.

Analysts said Tuesday’s selling pressure comes ahead of Thursday’s monthly expiry of derivatives contracts and fresh shorts being initiated. “Some selling pressure has been seen with shorts being rolled over in some of the counters,” said Rajesh Palviya, vice president (research) at Axis Securities.

Amid expectations of heightened volatility, bears tend to roll over bearish futures positions from one month to the next.

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