Explained: Why Adani Group stocks hit lower circuit today

Shares of Adani Group tumbled in morning trade today on a report that the National Securities Depository Ltd (NSDL) has frozen the accounts of three foreign funds that together own shares worth Rs 43,500 crore in four Adani Group companies.

The accounts of Albula Investment Fund, Cresta Fund, and APMS Investment Fund were frozen on or before May 31, as per the depository's website.

Adani Enterprises' share declined 25 per cent to hit an intraday low of Rs 1,201.10 against the previous close of Rs 1601.45 on BSE. Market cap of the firm fell to Rs 1,40,500.74 crore.

The stock has gained 777.5 per cent in one year and risen 179 per cent since the beginning of this year.

Share of Adani Ports was down 19 per cent to hit an intraday low of Rs 681.50. Market cap of the firm fell to Rs 1,46,444.65.

The other listed companies of the Group, Adani Green Energy, Adani Total Gas, Adani Power and Adani Transmission hit lower circuits at 5 per cent with only sellers on the counters.

"Adaniports in the short term is forming wave 4 means that the short to medium-term trend is negative and it has corrected sharply in today's trading session. So, in the short term Rs 675 and in the medium term 590 these are the two supports and in this dip, it should be utilized as a buying opportunity as once this correction is over wave 5 up will take it back to newer highs," Jay Thakkar, VP and Head of Equity Research, Marwadi Shares and Finance Limited, told Business Today.

"Adani enterprise was highly overbought and it has reversed from quite an oversold region. It has completed wave 3 on the upside so good consolidation or correction from these levels can be seen. In the medium term it can correct until Rs 1100- Rs 900 levels," he added.

An account freeze indicates that the funds would not be able to sell any of the existing securities or buy any new securities.

Officials at custodian banks that handle foreign investors said that the freeze on the three accounts could be because of insufficient disclosure of information regarding beneficial ownership under the Prevention of Money Laundering Act (PMLA), as mentioned in a report in The Economic Times.

Adani Group is yet to issue a statement. All three funds, based out of Mauritius, are registered with the Securities and Exchange Board of India (SEBI) as foreign portfolio investors (FPIs).

They together hold 6.82 per cent in Adani Enterprises, 8.03 per cent in Adani Transmission, 5.92 per cent in Adani Total Gas, and 3.58 per cent in Adani Green, as mentioned by the daily.

They are registered at the same address in Port Louis and don't have websites, the daily reported.