Countering allegations by the Congress party that National Stock Exchange (NSE) was protecting Adani Group’s interest and hence lifted surveillance measures on the group stocks and also included them in the key indices, the NSE on Sunday said everything was as per long set criteria and rules.
Congress is seeking to corner the BJP-led government on the Adani issue ever since US-based short seller Hindenburg Research on January 25 made huge allegations of financial irregularities and stock manipulation by the business group.
“Why is SEBI standing by as the NSE chooses to protect the Adani Group’s interests rather than that of lakhs of small investors? Why is SEBI allowing index investors to take on additional exposure to Adani Group stocks when financial advisors, who generally wealthier investors can afford, have been advising their clients to avoid investing in Adani Group stocks?” Congress General Secretary, Communications Jairam Ramesh asked at a public protest rally on Friday.
NSE’s response to Congress
In response, NSE said that the “inclusion or exclusion of stocks under Additional Surveillance Measures (ASM) and other trading activity is based on specific rules like price bands, trade for trade (T2T), and parameters, which consider price volatility, volumes, market capitalisation, client concentration, liquidity parameters, etc. The exact parameters along with the duration of applicability have been in the public domain and have been applied consistently.”
NSE said its rules were non-discretionary, pre-announced, and automatically applicable and common across exchanges, which are implemented automatically without human discretion.
“These rules and review periods are also pre-announced to the market. The actions which result out of these pre-announced rules are available in the public domain and are applied without discretion to all the stocks which attract the specific clauses of such rules,” NSE said.
Further, the NSE said that the entire framework was time tested and any changes to the said rules are also pre-announced before any future action on the basis of new rules becomes applicable.
“Process audits and periodic inspections are undertaken to ensure compliance with the parameters defined. The actions are applied in an automated way and no exceptions are allowed. Rules, actions, durations, etc are available on the NSE website,” the exchange said.
On inclusion and exclusion of the Adani group stocks in NSE indices, Ramesh said the NSE took a contrary call to other global index providers and included five Adani Group companies in no less than 14 indices beginning Monday (March 20).
“The index criteria for including any stock into an index or excluding any existing stock from an index is well defined, documented, and made available on the NSE website,” NSE said.