2 Adani stocks stare at $387 mn outflows; HAL, Sona BLW shares may gain big on MSCI inclusion

Two Adani group stocks Adani Total Gas Ltd and  Adani Transmisson Ltd and Indus Towers are expected to see passive outflows of a combined  $471 million as the three stocks are excluded from MSCI indices. Max Healthcare Institute, Hindustan Aeronautics (HAL) and Sona BLW Precision, which are added to MSCI indices could see $665 million in flows, Abhilash Pagaria, Head at Nuvama Alternative & Quantitative Research suggested in a note.

As per Nuvama, Adani Transmission could see $201 million in outflows while it pegs Adani Total Gas' outflows at $186 million. Following the cut in MSCI weights on the two stocks earlier, Nuvama had expected $122 million in outflow for Adani Transmission and $84 million in outflow in the case of Adani Total Gas. Earlier, the two scrips were in fact expected to attract $3 billion in inflows.

But, on Friday, MSCI decided to excludes the scrips for its indices. MSCI said the two companies will not meet the relevant free float-adjusted market capitalization requirements.

"Subsequent to our announcement of the FIF calculation treatment of Adani Group securities for the February 2023 Index Review, MSCI received feedback from market participants on significant potential replicability issues arising from the price limit mechanism being triggered for the affected securities. If the lower price limit were reached for Adani Total Gas and/or Adani Transmission on May 31, 2023, the reduced trading liquidity and volumes would likely result in significant difficulty in implementing the announced index changes at the official index security closing prices," MSCI said.

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In the case of Indus Tower, Nuvama sees $84 million in outflows. The brokerage sees Max Healthcare Institute, HAL and Sona BLW Precision to see inflows of $295 million, $195 million and 175 million, respectively.

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