Adani Group stocks survive MSCI indices review for now, but sword hangs over weightage; this is what can hurt

Adani Group stocks survive MSCI indices review for now, but sword hangs over weightage; this is what can hurt

Morgan Stanley Capital International (MSCI) on Thursday cut the free-float designations of four Adani group stocks, a move that analysts have warned could impact index weightings. The index provider said in a statement it has reduced the free floats of Adani Enterprises, Adani Total Gas, Adani Transmission and ACC. The remaining Adani group companies’ free floats will remain the same. The four companies, for which the free float designation change was announced, had a combined 0.4% weighting in the MSCI emerging markets index as of 30 January. The changes come into effect on 1 March 2023.

MSCI said Wednesday it was reviewing the amount of shares linked to the group that were freely tradable in public markets. Given the reduction in weightage, Adani Transmission (-$145 million), Adani Total Gas (-$110 million) and Adani Enterprises (-$161 million) might see the heaviest outflow among all, according to Nuvama Alternative & Quantitative Research. Other stocks that are likely to witness selling due to a reduction in weightage are HCL Technologies (-$97 million), Jindal Steel & Power (-$19 million), Shriram Finance (-$14 million), and ACC (-$12 million), the brokerage firm added.

Meanwhile, Bank of Baroda and CG Power & Industrial have been included in the MSCI India index, while Biocon has been excluded from the index, said MSCI in a release. With this, CG Power and Bank of Baroda could witness inflows of around $161 million and $145 million, respectively, according to Abhilash Pagaria of Nuvama Alternative & Quantitative Research. Whereas Biocon could see an outflow of $68 million, he added in the note. These changes will take place as of the close of 28 February 2023, MSCI added.