In the 15th instalment of questions under the series, 'Hum Adani Ke Hai Kaun' (HAHK), the Congress party has asked three questions to prime minister (PM) Narendra Modi, including why the Securities and Exchange Board of India (SEBI) is not trying to ensure that the positions of Adani group companies scrips in key indices are not reviewed.
Jairam Ramesh, member of Parliament (MP) and general secretary for communication of Congress, says “We had asked on 9 February 2023 how Adani Enterprises was added to the widely-used National Stock Exchange (NSE) Nifty 50 index in September 2022 despite questionable fundamentals, an excessive price-to-earnings ratio and a tiny free float. This decision 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 Rs15,000 crore.”
Here are the three questions asked by Congress to PM…
(1) 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 sustainability indices. The third largest, FTSE Russell, announced that it would make changes to the weightage of Adani group companies in its indices effective 20 March 2023.
Meanwhile, the NSE 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. 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?
(2) Far from reviewing the inclusion of Adani Enterprises in the Nifty 50, the NSE announced on 17 February 2023 that four more Adani group companies would be included in NSE indices as follows:
(a) Adani Wilmar: Nifty Next 50, Nifty 100
(b) Adani Power: Nifty 200, Nifty 500, Nifty LargeMidcap 250, Nifty Midcap 150, Nifty MidSmallcap 400, Nifty Total Market, Nifty Commodities, Nifty Housing
(c) Adani Total Gas: Nifty Shariah 25
(d) Adani Enterprises Nifty100 Liquid 15
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?
(3) 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. ESG is a major global investment theme and entire sectors such as electric vehicles, batteries and green fuels are reliant on ESG fund flows. What is holding SEBI back from investigating how Adani’s actions could damage the entire ESG investment theme in India
Read about the previous questions here…