MSCI rejig: Adani Enterprises, 3 other Adani group stocks may see $428 million outflows

With the global index aggregator MSCI reducing weights on four of Adani group stocks, outflows to the tune of $428 million look likely, Nuvama Alternate & Quantitative Research suggested in a note. CG Power and Bank of Baroda, which are added to MSCI Global Standard Indices, may see inflows of $161 million and $145 million, respectively, Nuvama estimated. Biocon, which has been excluded, could see $68 million in outflows, as per Nuvama.

Adani Enterprises is expected to see $161 million in outflows. It could be followed by Adani Transmission ($145 million, Adani Total Gas ($110 million) and ACC ($12 million), as per the brokerage estimate.

Shares of Adani Enterprises were trading 1.42 per cent lower at Rs 1,900. Adani Transmission hit its lower circuit limit at Rs 1,186.15. Ani Total Gas tanked fell 5 per cent to Rs 1,258.25. ACC was quoting at Rs 1,890.35, down 1.36 per cent. On the other hand, shares of Bank of Baroda and CG Power rose up to 3.4 per cent. Biocon declined 1.01 per cent to Rs 240.70.

MSCI reduced the free-float designations for the four Adani stocks, but did not remove any of the stocks. The four stock caried 0.4 per cent weightage in the MSCI emerging markets index, as of January 30. MSCI defines the free float of a security as the proportion of shares outstanding that is considered available for purchase in the public equity markets by international investors. MSCI said the free floats for the remaining Adani group companies in MSCI indices will remain the same. The changes come into effect on March 1.

Hindenburg Research's founder Nathan Anderson had on Thursday said MSCI's statement on Adani validates Hindenburg's findings on offshore stock parking by the Adani group. It was after MSCI said it had determined that the characteristics of certain Adani investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology.

MSCI had earlier said it has received feedback from a range of market participants concerning the eligibility and free float determination of specific securities associated with the Adani Group for the MSCI Global Investable Market Indexes.

"This determination has triggered a free float review of the Adani Group securities. MSCI will implement the resultant free float changes and associated market capitalisation determinations in connection with the February 2023 Index Review using data as of cut-off dates as described in Section 3.1.9 of the GIMI methodology," it had said.

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Also read: MSCI cuts free-float designations of Adani Enterprises, Adani Total Gas, Adani Transmission & ACC