NDTV Shares Rise as SAT Quashes Sebi Order Against Roys For Insider Trading

On the morning of October 6, NDTV shares saw a nearly 1 percent increase in trading following the Securities and Appellate Tribunal’s (SAT) decision to overturn the insider trading order against former promoters of the media company, Prannoy Roy and Radhika Roy.

In November 2020, the Securities and Exchange Board of India (SEBI) conducted an investigation into two complaints against the then-promoters of NDTV, which has since been acquired by the Adani Group. One complaint involved loans obtained from Vishvapradhan Commercial Pvt Ltd, while the other related to insider trading.

SEBI had imposed a two-year ban on Prannoy Roy and his wife Radhika Roy and prohibited them from accessing the capital market. According to SEBI, the Roys jointly purchased 4.83 lakh shares of NDTV on December 26, 2007, for Rs 19.34 crore. They were accused of engaging in insider trading by dealing in NDTV shares while in possession of unpublished price-sensitive information.

However, SAT’s order stated that the trades made by the Roys occurred during PSI-6, which was not considered price-sensitive information by SEBI. SAT referred to a previous case, Quantum Securities, where it was determined that PSI-6 was not price-sensitive information, and therefore, the charge of insider trading during that period could not be upheld.

The tribunal also noted that the Roys sold their shares on April 17, 2008, when the trading window was closed, which violated NDTV’s Code of Conduct and the provisions of Regulation 12(2) along with Regulation 12(1) of the PIT Regulations, 1992. However, since it was established that PSI-6 was not price-sensitive information and that NDTV founders were not insiders, the question of violating the NDTV’s Code of Conduct during the window closure period became irrelevant.

SAT emphasized that the Roys had obtained pre-trade clearance from the Compliance Officer of NDTV, and the trades executed by the two entities were in accordance with NDTV’s Code of Conduct and the PIT Regulations.

The Adani Group, which acquired most of the shares held by the Roys in late December 2022, now holds a 37 percent stake and has gained full control of NDTV.

In terms of stock performance, NDTV has underperformed both the Nifty Media and the benchmark Nifty this year, experiencing a 36 percent decrease compared to a 13.7 percent rise in the Nifty Media and a 7 percent increase in the Nifty.

Over the past six months, the stock has seen a 10 percent increase. It faced challenges earlier this year due to the Hindenburg report’s allegations of share manipulation by the Adani Group, which were denied by the conglomerate.

The stock’s relative strength index (RSI) stands at 49.7, indicating that it is trading neither in the overbought nor oversold territory. It exhibits high volatility with a one-year beta of 1.58. The stock is currently trading above its short-term averages but below the 50, 100, and 200-day moving averages, according to Trendlyne data.

As of 11:31 am, the stock was trading at Rs 214.60 on the NSE, marking a 0.4 percent decrease from the previous close.

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