Tag: Indian securities markets

NEW DELHI: Confident that the Adani meltdown will have negligible impact on Indian securities markets, the Centre on Monday accepted the Supreme Court‘s suggestion for a retired judge-led committee to study the recent alarming fall of Adani group shares following short seller Hindenburg Research’s report and recommend improvements in statutory and regulatory regimes governing the securities market to protect investors against such future events.
“We will suggest names of the experts to be included in the committee in a sealed cover. Some names may appeal to the Supreme Court, and some may not. But these names should not be discussed and opposed by the petitioners. The SC can choose from the list,” solicitor general Tushar Mehta told the bench, adding that no message should go out that the market regulator is not capable of handling the situation.
Solicitor general Tushar Mehta conveyed the government’s stand to a bench of Chief Justice DY Chandrachud, and Justices PS Narasimha and JB Pardiwala but also maintained that “the government is of the firm opinion that the existing structures and regimes, both statutory and regulatory, along with markets regulator Sebi and related agencies are fully competent to deal with the incident that happened recently.”

Mehta said, “The government has no objection to the constitution of a committee of experts. But the remit of the committee will be very important. It should not send a message to the international investors that the markets regulator is not competent to deal with the situation. It will affect market sentiments.”
He said the existing statutory regime and regulatory mechanism should not be undermined at any cost. “In respect of volatility of share prices of specific companies, there are robust frameworks in place, which get automatically triggered and when triggered, are transparently disclosed in public domain and serve as a signal to investors in respect of risks related to high volatility of those shares,” Sebi said. The bench posted the matter for hearing on Friday and asked SG to give the names of experts on that day.

Without naming Adani Group, Sebi informed the SC in its written submissions that the sharp drop in the market value of shares of the group companies have negligible impact on the sensex. “While the shares of the group have seen significant decline in prices on account of selling pressure, the wider Indian market has shown full resilience. The combined weight of the group companies in sensex is zero and in Nifty is below 1%,” it said.
Although the SC had on Friday entertained the two PILs by advocates Vishal Tiwary and M L Sharma, it had commented on their understanding of the issue by saying they appear “not -so-well informed”. Turning the proceedings into an “open dialogue”, the CJI-led bench had sought to know the consequences of the operations of short sellers like Hindenburg, who make money by pulling down shares of companies, for Indian investors in a world where capital moves seamlessly across national jurisdictions.

“How do we ensure protection of Indian investors? Suppose it is because of short selling… in the course of 3-4 minutes trades are done. As a result of short selling, value of products get depressed depending on the number of shares offered. Then the seller steps into the market to buy these shares, and gets the benefits and profits,” the SC had said.
Watch Hindeburg-Adani row: Centre agrees to form panel on investors’ safety