From 7 Feb, Adani Enterprises to vanish from Dow Jones sustainability indices

Beginning tomorrow, 7 February, S&P Dow Jones has said it will remove the Adani Group’s flagship firm Adani Enterprises from sustainability indices following a media and stakeholder analysis triggered by allegations of accounting fraud. The S&P Dow Jones Indices LLC is a joint venture between S&P Global, the CME Group, and News Corp, which was announced in 2011 and launched in 2012.

The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock-market index of 30 prominent companies listed on stock exchanges in the US, and is one of the oldest and most commonly followed equity indexes.

The move comes amid BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) putting three Adani Group companies — Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements — under their short-term additional surveillance measure (ASM).

The parameters for shortlisting securities under ASM include high-low variation, client concentration, number of price band hits, close-to-close price variation and price-earning ratio.

Market experts believe that putting in additional surveillance mean intra-day trading would require a 100 per cent upfront margin. The exchanges move might curb speculation and short selling in these stocks.

“Adani Enterprises will be removed from the Dow Jones sustainability indices following a media and stakeholder analysis triggered by allegations of accounting fraud,” S&P Dow Jones Indices said in a statement.

It will make the changes to the Dow Jones sustainability indices, effective prior to the opening on 7 February.

The 10 listed Adani Group firms have faced a combined erosion of over Rs 8.76 lakh crore in recent trading sessions on the BSE and NSE.

Last week, the NSE and BSE said Adani Enterprises, Adani Ports and Special Economic Zone and Ambuja Cements had satisfied the criteria for inclusion in short-term ASM.

Under the short-term ASM, the exchanges said, “applicable rate of margin shall be 50% or existing margin whichever is higher, subject to maximum rate of margin capped at 100%, with effect from February 6, 2023 on all open positions as on February 3, 2023, and new positions created from February 6, 2023”.

The exchanges also noted that the shortlisting of securities under ASM is purely on account of market surveillance, and should not be construed as an adverse action against the concerned company or entity.

Also last week, Adani Enterprises said it would not go ahead with its Rs 20,000-crore follow-on public offer (FPO) and will return the proceeds to investors.

Adani Group stocks have taken a beating on the bourses after US-based Hindenburg Research made a litany of allegations in a report, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.

Adani Group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.

Based on PTI inputs