The ASM framework aims to maintain the integrity of the market by controlling speculative transactions and the practice of margin lending to retail investors which promotes excessive risk. Such stocks that fall under this category attract stringent trading conditions, including a 100% margin upfront. These measures are aimed at stabilizing the trading by reducing speculative and risky activities. For Adani Green Energy and NDTV, this means that these stocks can now be traded under greater restrictions which could in the short run affect the trading volumes and liquidity of these stocks.
This development comes after a rough year of difficulties for the Adani Group which had to endure a great deal of turbulence in the stock market following the allegations made by Hindenburg Research earlier in the year 2024. The firm published a so-called report that held the group responsible for misconduct that included dealings and manipulating stocks.
Adani Group Companies have strongly rejected such allegations and have reiterated their compliance with all regulatory rules and guidelines, and even as such there was complete mayhem on some of its stock trading positions. The imposition of regulatory measures in this instance is an indication of the prevailing disorder in the market and the readiness of the bourses to adopt preemptive measures to contain the disorder.
For the shareholders, the ASM Stage-1 is classified within the stricter operational controls regarding stock movements. The required margin can be viewed as a safeguard to prevent excessive seasons of instability in the market. Even though this is primarily a measure to protect the market, it will restrict speculation considerably, which might result in a more, although not very liquid, trading environment. For those with a high-risk tolerance, this is likely to hamper their ability to make short-term gains, however, in the interests of long-term holders, it is likely to enhance prices and ensure stability. The re-classification might also induce apprehension among institutional investors and may harm the general market
The inclusion of Adani Green Energy and NDTV into the ASM framework did not come in isolation. Earlier, Adani Group companies such as Adani Transmission and Adani Total Gas were also considered under gauge in the enhanced stage of ASM. The actions indicate continued scrutiny over the financial practices and market behavior of the group. However, these stocks have been more than resilient to these measures, with some companies recovering quite significantly from their lows.
While on the one hand, it may make the investors’ faith in the market system stronger, on the other, it will throw into sharp relief the weaknesses within one of the biggest Indian conglomerates. For Adani Group, it is very important to weather these challenges and at the same time preserve the trust of its investors. For the investors themselves, this means keeping a watchful eye on how things unfold in terms of regulations and the markets to be able to make sensible choices.
