Adani shares still under pressure; group firms lose $125-bn macp since January 24 Shares of Adani Group companies remained under pressure on Tuesday even as flagship Adani Enterprises posted a profit for the quarter ended December (Q3) on coal trading and airports performance. Group companies have now lost over $125 billion, or Rs 10 trillion, in market capitalisation since the close of trading on January 24, a day before Hindenburg Research put out its report. Also read: Your Money: Ways to de-risk your portfolio ACC and Adani Ports were the only other group companies to end in the green, up 0.4% and 2.1%, respectively. Adani Green Energy, Adani Total Gas, Adani Transmission, Adani Wilmar, NDTV and Adani Power slid 5% each. Ambuja Cements was down 1.7% to Rs 336 apiece. The government on Monday accepted the Supreme Court’s suggestion for a retired judge-led committee to study the recent fall in shares of Adani Group companies and recommend improvements in statutory and regulatory regimes governing the securities market to protect investors in future. Two large Adani group companies are likely to repay their short-term commercial paper debt as they come due over the next few months, instead of rolling them over as is normal, according to a Reuters report. The group has appointed accountancy firm Grant Thornton for independent audits of some of its companies in a bid to discredit claims by short-seller Hindenburg Research that have battered its stocks and bonds, Reuters reported Monday. Also read: Nearly 5 lakh informal micro units formalised in a month via new Udyam Assist Platform: MSME Min The MSCI has changed the foreign inclusion factor in Adani Transmission, Adani Total Gas and Adani Enterprises, which could lead to estimated outflows of $416 million in these companies. The MSCI passive trackers will implement changes on February 28. Adani Enterprises is expected to see its weight decline by 30 basis points, which could lead to outflows of about $161 million, according to estimates by Nuvama Alternative & Quant Research. Adani Transmission and Adani Total Gas will see their weights decline by 30 bps and 20 bps, resulting in estimated outflows of $145 million and $110 million, respectively. ACC’s weight will reduce by 2 bps, resulting in outflows of $12 million. The affected securities will be further reviewed as part of the Full Country Float Review in May, which could lead to some index deletions and more passive selling, according to experts. The 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.
However, that doesn’t take into account the fact that geopolitical tensions on the Middle East are undeniably rising again which will mean limited downside.”
In the U.S., oil drilling rigs were up by one at 501 last week, Baker Hughes said in its weekly report.JPMorgan forecasted 26 oil rigs to be added this year, most of them in the Permian during the first half of the year.
“The timing of drilling is paramount, as rig additions at the start of the year will contribute to 2H24 production growth,” the bank’s analysts said in a note.
“Despite an impressive 1 mbd of crude and condensate production growth in 2023, we expect 2024 supply to increase by only 400 kbd due to lower completions activity levels vs 2023.”
Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns that the Federal Reserve would keep raising interest rates, which in turn boosted the dollar. While recession fears dominated the market last week, on Sunday International Energy Agency (IEA) Executive Director Fatih Birol highlighted that China’s recovery remains a key driver for oil prices.
“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Birol told Reuters on the sidelines of a conference in India.Price caps on Russian products took effect on Sunday, with the Group of Seven (G7), the European Union and Australia agreeing on caps of $100 per barrel on diesel and other products that trade at a premium to crude, and $45 per barrel for products that trade at a discount, such as fuel oil.
“For the moment, the market expects non-EU countries will increase imports of refined Russian crude, thus creating little disruption to overall supplies,” ANZ analysts said in a client note. “Nevertheless, OPEC’s continued constraint on supply should keep the market tight,” they said.