NSE, BSE put Adani Power under short-term additional surveillance measure yet again

NSE and BSE said that they would add Gautam Adani-controlled Adani Power under the short-term additional surveillance measure (ASM) framework from Thursday (March 23). The bourse in separate circulars said that Adani Power is shortlisted in the short-term ASM framework Stage-I effective March 23. 

The ASM is an initiative by the Securities Exchange Board of India (SEBI) and exchanges where the bourses share a listing of securities that are currently getting monitored due to factors like price fluctuation, volatility, volume variance, etc.  

Stocks that are shortlisted for inclusion on the ASM list serve as a warning to investors about unusual price movement. 

On Monday this week, the two exchanges moved Adani group stocks, Adani Green Energy and NDTV, from the second stage of the long-term ASM framework to Stage I. 

Earlier this month, NSE and BSE had put Adani Power along with Adani Enterprises and Adani Wilmar under short-term ASM. Later on March 17, these three stocks were excluded from the short-term ASM framework. The NSE and BSE said Adani Power has satisfied the criteria for inclusion under short-term ASM. 

Under the short-term ASM, the exchanges said, "Applicable rate of margin shall be 50 per cent or existing margin whichever is higher, subject to the maximum rate of margin capped at 100 per cent, w.e.f. March 24, 2023, on all open positions as on March 23, 2023, and new positions created from March 24, 2023." Market experts believe that putting in this framework means intra-day trading would require 100 per cent upfront margin.  

The bourses in their note highlighted that the shortlisting of securities under ASM is purely on account of market surveillance, and it should not be construed as an adverse action against the concerned company or entity. 

On Wednesday, S&P Global Ratings said that it is closely monitoring additional information on the Adani Group’s governance and funding to decide on its ratings action. 

S&P Global published an FAQ-style commentary titled, "Adani Group: The Known Unknowns", wherein the rating agency said the investors are keen to know and have been seeking clarity on the credit impact of a string of allegations against the Adani Group, which were published by US short seller Hindenburg Research on January 24 this year. 

"Like much of the market, we are waiting for more information about the Adani Group before deciding the direction of our ratings. We believe further details on governance and funding risks over the next 12-24 months would drive the ratings," said S&P Global Ratings credit analyst Abhishek Dangra. 

S&P Global in its note said that the Adani Group may face downside risks due to restricted access to funding and also due to a broader view of the quality of the group's governance. 

“For example, we are likely to take a negative rating action should any investigation uncover serious wrongdoing. This may include previously undisclosed material related-party loans, cash leakage, or misreporting," S&P Global said. 

It added: "Conversely, to revise the outlook to stable, we will need to be convinced that governance practices in the group and funding access will improve in line with an investment-grade credit profile." 

In the last week of February, S&P Global revised its ratings to negative on Adani Electricity Mumbai Ltd and Adani Ports and Special Economic Zone Ltd., to highlight the governance risks and funding challenges of the wider group. The credit rating agency affirmed the 'BBB-' ratings on these entities.