MSCI said it had reduced the free floats of Adani Enterprises, Adani Total Gas, Adani Transmission and the Associated Cement Companies, the report said. NSE -11.02 %, in its indexes after reassessing the number of shares that are freely traded.
Index provider MSCI said it will cut the weightings of four Adani Group companies, including flagship firm Adani Enterprises, in its indexes after reassessing the number of shares that are freely traded.
The move comes in the wake of a Jan. 24 report by U.S. short seller Hindenburg Research that has accused the Indian conglomerate of improper use of offshore tax havens and stock manipulation. The group has denied any wrongdoing.
The Hindenburg report has plunged the group, led by billionaire Gautam Adani, into crisis, wiping some $110 billion off the value of the group’s main seven listed firms.
In addition to Adani Enterprises – the group’s coal-miner-cum-incubator for new projects, MSCI also plans to cut the weightings for Adani Total Gas – a venture with France’s TotalEnergies and Adani Transmission , a power transmission company.
It will also reduce the weighting of ACC, a major Indian cement company the Adani Group acquired from Holcim last year and which is not one of the group’s main seven listed firms.
Adani Group did not immediately respond to a request for comment from Reuters on Friday.
The four companies had a combined 0.4% weighting in the MSCI emerging markets index as of Jan. 30. The changes come into effect on March 1.
FREE FLOAT UNCERTAINTY”
MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float,” U.S.-based MSCI said.”This determination has triggered a free float review of the Adani Group securities,” it added in a statement.
Free float is defined as the proportion of outstanding shares considered available for purchase in public equity markets by international investors.In response to Thursday’s MSCI statement, Hindenburg Research founder Nathan Anderson wrote on Twitter: “We view this as validation of our findings”.
Some Adani company shares had rebounded this week but tumbled again after the MSCI announcement, with the group’s flagship Adani Enterprises down 11%.Adani Transmission, Adani Total Gas and Adani Power were each down 5%, while Adani Ports and Special Economic Zone was down nearly 3%.
“The sentiment is affected by the MSCI announcement. It will lead to outflows if MSCI removes certain stocks,” said Ambareesh Baliga, a Mumbai-based independent market analyst.
The MSCI announcement marks the latest setback for Adani after Adani Enterprises was forced to abandon a $2.5 billion stock offering due to the market rout.
There was no reference to Adani stocks in a separate MSCI quarterly index review statement later on Thursday.
Indian opposition parties have seized on the crisis as an opportunity to corner Modi, who is eyeing a third term in elections next year. They accuse his administration of giving favours to the Adani Group, a charge denied by the government and the company.
Sporadic protests have taken place in parts of India as opposition parties demand investigations.