Adani group stocks tumble after MSCI tweak, market capitalisation falls by ₹23,000 crore

• Adani group stocks came under selling pressure on Monday after index provider MSCI lowered the free float percentage of Adani Transmission and Adani Total Gas.
  
• Shares of both Adani Transmission and Adani Total Gas were locked in lower circuit in the morning trade.
  
• Eight out of the ten Adani group stocks were trading in the red in morning trade, with the group’s combined market capitalisation falling by ₹23,200 crore.
  

Adani group stocks came under selling pressure on Monday after index provider MSCI lowered the free float percentage in Adani Transmission and Adani Total Gas in its May index review. Shares of Adani Transmission and Adani Total Gas were locked in lower circuit in the morning trade.

Eight out of the ten Adani group stocks were trading in the red in morning trade, with the group’s combined market capitalisation falling by ₹23,200 crore to ₹10.96 lakh crore.

MSCI announced on Friday last week that it would lower the free float percentage of Adani Transmission to 10%, and Adani Total Gas to 14% in its May index review. The free float of both the companies was at 25% earlier.

MSCI’s indices are used by foreign investors and mutual funds, among others, and the free float cuts in the two Adani group companies could result in outflows of up to $222 million from overseas passive funds, according to IIFL Alternative Research.

Free float refers to the number of outstanding shares that foreign investors can buy or sell in public markets.

“For the remaining Adani securities, MSCI will continue to apply the foreign inclusion factor (FIF) implemented as part of the February 2023 index review,” MSCI said.


Source: NSE, as on May 8, 2023

Earlier in February, MSCI had announced the free float cuts in four Adani group companies – Adani Transmission, Adani Total Gas, Adani Enterprises and ACC. However, a few days later, the index provider reversed the cuts for Adani Transmission and Adani Total Gas and postponed them to May.

MSCI’s decision to cut the free float of Adani companies was made after the Hindenburg report alleged that more than 75% of the outstanding shares of the group companies were held by promoters. The report alleged that it identified 38 shell entities in Mauritius, either controlled by Vinod Adani or his close associates.

“Many of the Vinod Adani-associated entities have no obvious signs of operations, including no reported employees, no independent addresses or phone numbers and no meaningful online presence,” the report had said.

Since then, the Adani group’s combined market capitalisation has fallen by ₹11 lakh crore, from ₹21.96 lakh crore on January 24.

Three Adani stocks still down by over 50%

Three Adani group stocks are still down by at least 50% of their value since January 24. Adani Total Gas and Adani Transmission have declined the most, while Adani Power and Adani Ports & SEZ have been the most resilient.


Source: NSE, as on May 8, 2023

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