SEBI not protecting retail investors by reviewing position of 'suspect companies': Congress

The Congress on Monday accused the SEBI of not protecting retail investors by reviewing position of "suspect companies" in key indices despite a drastic fall in their stock prices amid global concerns

SEBI not protecting retail investors by reviewing position of 'suspect companies': Congress
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PTI

The Congress on Monday accused the SEBI of not protecting retail investors by reviewing position of "suspect companies" in key indices despite a drastic fall in their stock prices amid global concerns.

Posing a set of three questions to the government on the Adani issue as part of the party's 'Hum Adani Ke Hain Kaun (HAHK)' series, Congress general secretary Jairam Ramesh said following the Hindenburg report, the world's biggest stock index provider MSCI announced that it would reduce the weightage of Adani Group stocks in its indices in the coming months.

The second largest provider, S&P Dow Jones, stated that it would remove Adani Enterprises from its sustainablity indices, while the third largest, FTSE Russell, announced it would make changes to the weightage of Adani Group companies in its indices effective March 20, he said.

"Meanwhile, the NSE (National Stock Exchange) has announced no review of Adani Enterprises' position despite the dramatic fall in its price and global concerns over the true free float given allegations of money laundering and round tripping," Ramesh said.

"Should the Securities and Exchange Board of India (SEBI) not be trying to protect retail investors by at least ensuring that suspect companies' positions in key indices are reviewed?" the Congress leader asked.

He also claimed that far from reviewing the inclusion of Adani Enterprises in the Nifty 50, the NSE announced on February 17 that four more Adani Group companies would be included in the NSE indices. "Why is the NSE adding insult to injury for the lakhs of investors who have lost money in Adani Group companies. Why is it being allowed to expose more investors to risky Adani stocks? Are you putting any pressure on the NSE to help your friends via the NSE Index Advisory Committee member who also serves on your Economic Advisory Council?" Ramesh asked.


The Congress general secretary said the party on February 9 had asked how Adani Enterprises was added to the widely-used NSE Nifty 50 index in September last year despite questionable fundamentals, an excessive price-to-earning ratio and a tiny free float.

"This decision had exposed Indian retail investors to serious company risk by compelling Nifty index funds, which include the Employees Provident Fund Organisation, to increase their purchases of Adani stocks to Rs 15,000 crore," he said.

Ramesh alleged that the Adani Group's actions are provoking global scepticism about Indian companies' environmental, social and governance (ESG) standards.

"Reports that Adani Green Energy is providing collateral for loans to Adani's Australian coal project has prompted Norway's largest pension fund to divest its holdings in the firm since its green credentials are now under serious question," he said.

Ramesh added that the ESG is a major global investment theme and sectors such as electric vehicles, batteries and green fuels are reliant on ESG fund flows.

"What is holding the SEBI back from investigating how Adani's actions could damage the entire ESG investment theme in India?" he asked.


The Congress has been targeting the government over the Adani issue and has been demanding a joint parliamentary committee probe into the Hindenburg report on the conglomerate that led to a crash in stock prices of its companies across various stock exchanges.

Questioning the allocation of contracts for airports to the Adani group, former Congress president Rahul Gandhi on Monday in a video alleged that the billionaire industrialist benefited from the central government's "magic" and asserted that he was not against businesses but the creation of monopolies.

In the five-minute video titled 'Mitr-kaal' released on his social media accounts, Gandhi said his remarks in Parliament on the "truth" about the businessman were expunged and removed from the records.

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