Adani Enterprises shares recover from early 20% drop on Morgan Stanley announcement

Adani Enterprises' shares plunged 20 per cent at opening trade on Thursday but recovered sharply on the back of MSCI's announcement to review its free-float status. The stock made a swift rebound to coup all the early cuts for the day.

MSCI (Morgan Stanley Capital International) said that certain investors in Adani Group securities should no longer be designated as free float, and it is reviewing this status. The changes would be announced later in the day.

Shares of Adani Enterprises plunged 20 per cent at the beginning of Thursday's session to Rs 1,726.95. However, the stock made a sharp rebound of 25 per cent at Rs 2,200 during the day. The scrip had settled at Rs 2,158.65 on Wednesday.

Adani Enterprises has jumped 116 per cent in just five sessions from its 52-week low at Rs 1,017 on Friday, February 2023. However, the stock is still about 49 per cent below its 52-week high at Rs 4,189.55.

MSCI defines free float as the proportion of shares outstanding available for purchase in the public equity markets by international investors. MSCI is an index provider and a number of Adani Group companies are constituents of its various indices.

Interestingly, if the weightage of Adani Group companies on MSCI's indices changes, it may lead to a significant outflow from the company. This is because a number of passive funds invest according to the weightage of these funds and any rejig in the weightage of the company may lead to a change in investment by the funds.

The group led by billionaire Gautam Adani has been engulfed in crisis since US short-seller Hindenburg Research published a report in January 2023, accusing the conglomerate of improper use of offshore tax havens and stock manipulation.

Hindenburg Research's founder Nate Anderson on Thursday said MSCI's latest release on Adani validates the short seller's findings on offshore stock parking by the Adani Group.

Also read: Gautam Adani's net worth

Watch! Bank of Baroda says not worried about its exposure to the tumult-hit Adani Group. 

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