Will the stock market be hit by the Adani scandal? Or are the rumours and reports that have become the talk of Dalal Street meant to “deliberately mislead the investing community”, as has been alleged by the Adani group? Speculations arose over business journalist Sucheta Dalal’s cryptic tweet on June 12 when the lady of Harshad Mehta stock scam fame tweeted: “Another scandal, hard to prove outside the black box of information available with SEBI tracking systems, is the return of the operator of the past who is relentlessly rigging prices of one group. All through foreign entities! His speciality and that of a former FM. Nothing changes.”

Though Ms. Dalal refrained from taking any names in her cryptic remark, Dalal Street had no difficulty in guessing who they were!

On June 14, the ‘Economic Times’ came out with a lead story on the National Securities Depository (NSDL) freezing the accounts of three foreign funds – Albula Investment Fund, Cresta Fund and APMS Investment Fund. These funds together own over Rs. 43,500 crore worth of shares in four Adani group companies. The reason behind this freeze is not known yet. A report in ET, citing top officials at custodian banks and law firms handling foreign investors, said this could be because of insufficient disclosure of information regarding beneficial ownership as per the Prevention of Money Laundering Act (PMLA). SEBI PROBE

According to media reports, SEBI had revamped the Know Your Customer (KYC) documentation for FPIs in line with PMLA in 2019. Funds were given time till 2020 to comply with the new norms, failing which their demat accounts would be frozen. Under the new rules, FPIs were required to submit a few additional details, including disclosures on common ownership and personal details of key employees such as fund managers. SEBI is reportedly investigating whether there has been price manipulation in Adani group stocks, which have gained between 200% and 1,000% in the past one year. SEBI initiated a probe in 2020 and the investigation is still going on. The market did not waste time in reacting to the disturbing development. Prices of Adani group shares slumped. The market price of Adani Enterprises, which had skyrocketed from the all-time low of Rs 47 to Rs 1,718, dropped to Rs 1,501, while that of Adani Ports which had surged from Rs 105 to an all-time high of Rs 1,324 dropped to Rs 768.70 on Monday. Likewise, Adani Power which had soared from Rs 15 to Rs 167 came down to Rs 140.90. Adani Green reacted from Rs 1,394 to Rs 1,175.95 and the price of Total Gas slumped from Rs 1,680 to Rs 1,541.55. Though during the trading session their prices had declined more steeply, they rebounded towards the end after the company clarified that the demat accounts of the three foreign funds are not frozen.

What is the truth? Will SEBI throw some light on its investigations? Who are the owners of these three foreign companies? Have these developments hinder the runaway rise in prices of Adani group stocks? And the pace of their journey towards emerging as the richest person in India by replacing Mukesh Ambani?

Adani angling for UP power firm

The Adani group is on the prowl again. This time, the group wants to take over South East UP Transmission Ltd. – an electricity transmission company in Uttar Pradesh which has been abandoned by its former Spanish promoter. The Spanish company has gone bankrupt and the Indian lenders, which had lent Rs 6,000 crore to the project, have put the company up for sale.

Apart from the Adani group, the Torrent group is also in the race along with a few government-owned electricity companies. The South East UP Transmission Ltd will be sold by July after the highest financial bids are called in. The project has 1,000 km of transmission lines under commissioning and will provide a big add-on to the successful bidder.