Reliance Infrastructure Ltd. shares hit the 4% lower circuit for the fifth consecutive trading session after the company disclosed the provisional attachment of its stake in Reliance Power worth ₹763 crore. According to reports from Essential Business Intelligence, the stock continues to trade under weekly restrictions imposed under the insolvency-linked surveillance framework. The trading restrictions have become a key issue for the company, which says the mechanism has affected liquidity and price discovery for its shares.
The trading restrictions come as broader market sentiment remains challenged by geopolitical tensions. Sensex fell 0.78% to 76,965.69 and Nifty 50 dropped 0.71% to 24,034.1 on Monday, with all 16 major sectors declining. As reported by multiple sources, the selloff was driven by renewed US-Iran conflict and Iran's claim to have closed the vital Strait of Hormuz, pushing crude oil prices higher by over 4%, reaching $79.11 per barrel. Market analysts note that while there's no panic like March's oil market crisis, significant correction risks emerge if Brent crude crosses $90 per barrel.
Trading in Reliance Infrastructure shares is currently permitted only once a week within a 5% price band after the stock was placed under the Additional Surveillance Measure (ASM) framework linked to the Insolvency and Bankruptcy Code (IBC). As reported by Essential Business Intelligence, stock exchanges automatically impose the framework on companies undergoing insolvency proceedings to curb excessive volatility. The company says the current framework has adversely affected more than seven lakh public shareholders because trading is allowed only once a week within a narrow 5% price band.
Reliance Infrastructure said on July 7 that it had submitted a formal representation to the Securities and Exchange Board of India, the National Stock Exchange and the Bombay Stock Exchange, seeking a review of the ASM framework linked to the IBC and the trading restrictions on its shares. According to the company's statement reported by Essential Business Intelligence, the current framework results in price movements that are largely mechanical and predictable. The company argues that this restrictive trading environment has significantly impacted the liquidity and price discovery mechanisms for its shares.
