Even after the ADAG Chairman, Mr Anil Ambani's reassurances that SEBI's action against two of his companies would have no effect on his group's fundraising or expansion plans, stocks of all the ADAG companies took a beating on Monday.

Each of the six companies of the Reliance Anil Dhirubhai Ambani Group (ADAG) lost more than 5 per cent, except Reliance Communications whose stock went down by 4.7 per cent or Rs 6.60 a piece on the BSE.

On the BSE, Reliance Mediaworks saw the highest drop of 8.5 per cent, or Rs. 16.80, to close at Rs 182.50. Reliance Infrastructure followed with a fall of 7.8 per cent, to end the day at Rs 735.70, while Reliance Capital tumbled 6.45 per cent, or Rs 39.55, to close at Rs 573.80.

Clearly, market men did not buy the Mr Ambani's reassurances. “Markets are obviously driven by sentiments and perceptions. Whenever there is regulatory uncertainty, markets will react strongly. For sometime now, markets have been impatient and their first reaction was to offload these shares,” said Mr Jagannadham Thunuguntla, Head- Research, SMC Global Securities.

However, not all analysts are convinced that this could be termed as ‘panic selling'. “The ADAG companies had underperformed the index. They were over-leveraged and their debt-account books were very high. The real issue is of corporate governance for which the company was punished by the markets. It will be a while before the stocks come up. Also, there is a chance that these companies will be re-rated downwards,” said an analyst on conditions of anonymity.

Analysts are of the opinion that whatever damage was to be done, has already been done. “Now it all depends on how the group will get new funding from and at valuations, since most of these companies are capital intensive companies,” added Mr Thunuguntla.

It must be noted, however, that most companies in the peer group of the ADAG companies also saw their stocks falling, albeit by about 2 per cent each. The exception in this case is Reliance Communications, whose competitors Bharti Airtel and Idea Cellular, went up by 1.43 and 2.14 per cent, respectively.

SEBI, on Friday, passed an order barring two of ADAG companies, Reliance Infrastructure and Reliance Natural Resources Ltd (RNRL), from participating in the secondary market until 2012. RNRL ceases to exist as of now since it got merged with Reliance Power in early November 2010.

Meanwhile, on a notice put up late on Monday evening on the BSE Web site, the promoters of Reliance Infrastructure increased their stake in the company by 4.99 per cent.

A total of 2.3 crore shares were acquired increasing the promoters' stake from 42.7 per cent to 47.7 per cent. The Sensex closed flat on Monday at 18, 882.25, up by 21.81 points, a mere 0.12 per cent.