SEBI sets up surveillance measures to address excessive volatility

Adani Group stock crash: Market regulators Securities and Exchange Board of India said on Saturday that for orderly and efficient functioning of the market, all surveillance measures are in place to address excessive volatility in specific stocks. The market regulators said it was committed to ensuring market integrity and structural strength despite the rout of Adani Group stocks. On February 1, it was reported that SEBI is looking into the recent crash in Adani Group shares and looking into any possible irregularities in a share sale by its flagship company.

The SEBI said in the past week unusual price movement was observed in the stocks of a business conglomerate. It assured market integrity and structural strength that it will be taken care of. As part of its mandate, the market regulator stated: SEBI wants to maintain orderly and efficient functioning of the market and has set up a set of public available surveillance measures, including the ASM framework, to address excessive volatility in specific stocks. The mechanism is automatically triggered if there are certain conditions of price volatility in a stock. After the recent rout of Adani Group stocks, SEBI's statement is its first reaction. It further added: In all specific entity related matters, if information comes to SEBI snotice, the same is examined and appropriate action is taken after due examination. The National Stock Exchange placed Adani Enterprises, Adani Ports, Ambuja Cements under a ASM Additional Surveillance Margin framework with effect from February 3, 2023, which will require a 100 per cent margin to trade in their shares. A lot of speculation and short selling will likely be stopped by this. There will be additional surveillance measures ASM on securities with surveillance concerns based on objective parameters viz. Price Volume variation, Volatility, etc., was explained by the NSE on its website. The step will probably curb speculation and short selling.

FM Nirmala Sitharaman said regulators like SEBI are monitoring the developments in the Adani group and they are independent to function. The market is in prime condition. SIBI has worked well on it, said Sitharaman at a press conference in Mumbai. Sitharaman made a comment after she was asked by Adani Group stocks value crash this week in the stock market.

Adani Group has lost around 9 lakh crore m-cap in the last seven trading sessions since January 24, when US-based short-seller Hindenburg Research released a report accusing Adani Group companies of brazen stock manipulation, money laundering, and accounting fraud scheme over the course of decades.

The total m-cap of the group dipped to a low of Rs 10 lakh crore on February 3 from Rs 19.2 lakh crore on January 24.

On Friday, Sitharaman said that LIC and SBI were not over-exposed to Adani Group shares and that investors' confidence would endure in the market.

She said that India remained an extremely well governed country and a very well regulated financial market.