Adani stocks lose $10 billion in market value as MSCI exclusion weighs

SC panel report on Adani finds no regulatory failure on price manipulation

Stocks part of Adani Group have lost a combined $10 billion in market value this week, weighed down by MSCI Inc.’s move to exclude two entities from its India gauge and concerns over potential dilution from a fundraising plan.

Adani Total Gas Ltd. and Adani Transmission Ltd. — the two stocks to be dropped from the MSCI India gauge at the end of this month — headed for their worst weeks since late February. The exclusions will probably trigger around $390 million of selling by passive funds, Brian Freitas, an independent equities analyst who publishes on Smartkarma, predicted earlier.

Flagship Adani Enterprises Ltd., incubator for many of the group’s investments, is also set for a weekly loss of almost 4%, the biggest since March. The company and the transmission unit last week flagged plans to raise $2.6 billion via a qualified institutional placement or other modes, triggering concerns of equity dilution.

“If the shares are priced too low in a QIP issue, it could be seen as a sign of weakness or desperation,” Arpit Shah, a fund manager at Care Portfolio Managers, wrote via email.

Adani stocks have been trying to regain their footing after fraud allegations by Hindenburg Research in late January spurred a rout that at one point wiped out over $150 billion from the group’s market value. Stocks recovered after GQG Partners in early March bought stakes in four of the group’s entities, offering a vote of confidence. The market-cap loss currently stands at about $128 billion.

Adani has denied Hindenburg’s allegations, while taking steps in the aftermath of the report to assuage investor concerns over debt and corporate governance.