An air of potboiler-worthy intrigue hung over markets on Monday after stocks of the Adani group were clobbered on the bourses, precipitated by media reports that the National Securities Depository Ltd (NSDL) had frozen the demat accounts of three Mauritius-based overseas funds that had invested in Adani Enterprises, the group’s holding company, and three other subsidiaries that were valued at Rs 43,500 crore as of last Friday.

Late in the afternoon, Adani Enterprises sent a note to the bourses denying that the demat accounts through which these funds held their investments in the group companies had been frozen.

The clarification from the group came to the exchange 30 minutes before trading ended for the day. It said: “These reports are blatantly erroneous and is done to deliberately mislead the investing community. This is causing irreparable loss of economic value to the investors at large and reputation of the group,” the conglomerate said.

The three overseas funds were Albula Investment Fund, Cresta Fund and APMS Investment Fund which together held shares in four Adani group companies: Adani Enterprises, Adani Transmission, Adani Total Gas and Adani Green Energy.

Stock exchange data reveals that these funds collectively hold 6.82 per cent in Adani Enterprises, 8.03 per cent in Adani Transmission, 5.91 per cent in Adani Total Gas, and 3.58 per cent in Adani Green Energy.

Adani Enterprises said the statement was being issued after its registrar and transfer agent — Ahmedabad-based Link Intime Pvt Ltd — had sent a “written communication...clarifying that the demat account in which the aforesaid funds hold the shares of the company are not frozen”.

But by then, the damage had been done.

Investor wealth worth around Rs 53,000 crore had been wiped out across Adani group stocks as six listed Adani group stocks were battered in a bout of frenzied trading.

Adani Enterprises, the flagship firm, plunged around 25 per cent to an intra-day low of Rs 1,201.10, while the three other stocks fell by by up to 5 per cent.

The meltdown struck Adani Ports and Special Economic Zone — in which these funds do not hold shares above the reportable threshold of 1 per cent — as well which plunged by almost 19 per cent.

The NSDL website said these accounts had been frozen on May 31. It added that the freeze could be due to insufficient disclosure of information regarding beneficial ownership of these funds.

Market regulator Sebi and the depository maintained a studied silence throughout the day. It wasn’t clear why the Adani group’s statement came only after 3 pm. If the accounts had not been frozen — and the statement had been issued earlier — investors would have been spared the mayhem in the markets.

Market observers said it was not still not clear when the freeze on the accounts had been lifted.

A Reuters report, quoting a senior NSDL official, said the depository had frozen accounts of the funds that hold certain other securities and not those holding Adani company shares, adding that freeze was “not new”.

“Foreign portfolio investors generally have one account. But in certain circumstances, they can have multiple accounts. In this case, the funds hold at least more than one account, ” the report quoted the official as saying, adding that he had spoken on condition of anonymity because he was not authorised to speak publicly on the issue.

Widening empire

The Adani group shares have seen a stupendous rally over the past one year as group chairman Gautam Adani — who was recently declared as the second richest man in Asia after Mukesh Ambani with a net worth of $66.5 billion — expanded his empire by snapping up control of the Mumbai international airport, winning city gas distribution rights across the country, promoting a clutch of seaports and even bidding for the redevelopment of Mumbai’s Chhatrapati Shivaji terminus (CST) railway station.

The stock of Adani Total Gas, for instance, has surged by 1087 per cent in the past year. Adani Enterprise has leapfrogged by around 972 per cent while Adani Green Energy has yielded a return of 237 per cent.

There have been questions about the valuations of some of these stocks because of the low free float as promoters holding remains very high and a few overseas funds hold a substantial amount of the stock, leaving very little opportunity for retail investors to buy the stock.

‘‘When the floating stock is low, concentrated aggressive buying can push up stock prices way too high,’’ said V.K. Vijayakumar, chief investment strategist at Geojit Financial Services.