NSE asserts all decisions are ‘transparent’ amid heat over Adani Group stocks

The National Stock Exchange, in a statement, defends its indexing and surveillance moves, says there is ‘no human discretion in deciding on inclusion or exclusion of stocks in any of its indices’

The National Stock Exchange (NSE) late on Sunday issued a three-page statement to assert that its surveillance actions on individual stocks and decisions to include or exclude stocks in various Nifty indices are driven by “transparent” policies and rules without “human discretion”. 

The statement comes two days after the exchange removed three Adani Group stocks, including its flagship Adani Enterprises, from its short-term additional surveillance framework. Stocks are put under the additional surveillance framework by exchanges to safeguard investors amid high volatility. 

Also read: Congress flags SEBI’s silence over NSE stance on Adani Group stocks

The NSE statement also sought to defend its subsidiary NSE Indices’ decisions and said there was “no human discretion in deciding on inclusion or exclusion of stocks in any of if [sic] its indices”. Last month, the subsidiary had announced the addition of five Adani Group firms into 14 of its indices, effective March 30, while retaining Adani Enterprises and Adani Ports and SEZ in its flagship Nifty 50 index.   

While the reconstitution of the indices was based on trading data for the six-month period ending January 31, financial experts had sought a review of the move to protect investor interest in the midst of the meltdown in the Group’s stocks since January 24, when U.S.-based Hindenburg Research released a report alleging several misdemeanours by the Group. 

“NSE surveillance actions on eligible stocks are applicable as per transparent rules. These rules are non-discretionary, pre-announced and automatically applicable,” the exchange said, adding the norms are in the public domain, “common across exchanges” and are “implemented automatically and no human discretion is allowed”. 

The exchange also underlined that “the overall Risk Management Framework put in place for trading in secondary market has been designed to provide robustness to capital market ecosystem, especially in volatile times”.