Reliance Power Shares Hit Lower Circuit for Second Consecutive Day Amid SEBI Investigation
News Mania Desk/Agnibeena Ghosh/26th August 2024
Reliance Power’s stock experienced a significant drop, hitting its lower circuit limit for the second consecutive day on Monday, trading at ₹32.75 on the NSE. This dramatic decline comes in the wake of an investigation by India’s market regulator, SEBI, which uncovered serious financial misconduct involving key figures from Reliance Home Finance, including Anil Ambani. The investigation revealed that substantial funds were allegedly diverted through a network of loans granted to borrowers with poor creditworthiness, all of whom were connected to the company’s promoters.
The regulatory scrutiny has intensified as SEBI’s probe revealed that the funds were not only diverted but also misused, prompting a major market reaction. The news of these findings has considerably shaken investor confidence, resulting in Reliance Power’s share price hitting its lower circuit limit, indicating a steep and sudden drop in stock value.
In response to the situation, Reliance Power issued a statement on Sunday addressing the concerns raised by the SEBI investigation. The company clarified that Anil Ambani has resigned from its board of directors, a move that the company suggests preemptively addressed potential conflicts before the latest SEBI order. Reliance Power emphasized that the SEBI order does not impact its current operations. The company asserted that it was not a noticee or party to the proceedings before SEBI and that no specific directives were issued against it in the recent SEBI order.
Reliance Power further highlighted that Anil Ambani had already resigned from the board following an earlier interim order dated February 11, 2022, which was part of the same proceedings. Consequently, the company argued that the recent order dated August 22, 2024, does not affect its business or operational affairs.
The fallout from the SEBI investigation has also adversely impacted other companies within Anil Ambani’s corporate group. Alongside Reliance Power, Reliance Home Finance and Reliance Communications also hit their lower circuit limits on Monday. The ripple effect of the regulatory actions has created widespread turbulence across the group’s various businesses, reflecting broader market concerns and investor apprehension.
Overall, the ongoing investigation and its repercussions have placed considerable pressure on Reliance Power and associated companies, driving their stock prices down sharply. The market’s reaction underscores the significant impact of regulatory actions on investor sentiment and company valuations, particularly when high-profile figures and financial misconduct are involved. As the situation develops, stakeholders and investors will be closely monitoring further updates and potential impacts on Reliance Power and its affiliated enterprises.
