Shares of Adani Group companies began trading lower on February 9, following a two-day recovery. The drop was prompted by MSCI’s announcement of a review regarding the number of Adani Group-linked shares that are readily available for trading on public markets.
All 10 stocks of the Adani Group faced a decline, with the leading company, Adani Enterprises Ltd, experiencing a significant drop of up to 15 percent. The decline followed a substantial increase of 35 percent in the previous two days.
The other group stocks that witnessed decline are — Adani Ports lost 7 percent, Adani Power fell 5 percent, Adani Transmission 5 percent, Adani Total Gas Ltd 5 percent, Adani Green Energy 5 percent, ACC declined 3.7 percent, Ambuja Cement 6.3percent and NDTV 3.7 percent.
MSCI announced that any changes to the free float and market capitalisation of Adani Group stocks, which will impact the calculation of these figures, will be implemented and announced as part of its February index review, set to be released on February 9.
Analysts said If MSCI reduces its weightings, it could lead to further selling in Adani Group stocks, as exchange-traded funds and index funds that use the MSCI as a benchmark will have to adjust their portfolios.
Abhilash Pagaria of Nuvama Research noted that if MSCI hypothetically reduces the float by 25 percent, Adani Enterprises would experience an outflow of $110 million. He also mentions that ACC and Ambuja, recently acquired by the Adani group, should not be a cause for concern regarding float concerns.
The stocks of the group experienced a strong resurgence in the last two trading sessions with Adani Enterprises witnessing a surge of 35 percent after dropping over 55 percent due to accusations made by US-based short seller Hindenburg Research. The research firm accused the Adani Group of “stock manipulation and accounting fraud,” causing the conglomerate’s market capitalisation to plummet by over $117 billion.
The two-day surge in stocks was triggered by the company’s announcement to pay off $1.11 billion in loans on shares ahead of their due date in 2024. The move was met with enthusiasm from investors, who were also encouraged by supportive statements from some lenders regarding the stability of Adani Group companies. Additionally, the group’s recent earnings reports further boosted investor confidence.
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