Global index MSCI pares weightage of 4 Adani firms in indices

The shares of Adani Group companies have already lost around $ 110 billion in market capitalisation in the last two weeks.

The four companies in the Adani Group, whose weightage was dropped, are: group flagship Adani Enterprises Ltd, Adani Total Gas, Adani Transmission and ACC. All changes will be implemented as of the close of February 28, 2023, MSCI said in a statement.

“MSCI has also changed the Foreign Inclusion Factor (FIF) in a few names and the major downward revision has been seen in Adani Transmission, Adani Total Gas and Adani Enterprises. This will lead to meaningful outflows in these names,” Nuvama Alternative & Quantitative Research said in a report.

While Adani Enterprises’ weightage has been reduced by 0.3 basis points (one basis point is one-hundredth of a percentage point), that of Adani Transmission, Adani Total Gas, and ACC have been reduced by 0.3 bps, 0.2 bps and 0.02 bps, respectively, as per the report.

MSCI has, however, maintained the weightage on Adani Ports & SEZ, Ambuja Cements, Adani Green Energy and Adani Power. Adani Wilmar and NDTV are not part of any MSCI indexes.

Shares of Adani Group companies fell by up to 5 per cent on the stock exchange after the reduction in weightage. Adani Enterprises fell 4.15 per cent, Adani Power, Adani Transmission, Adani Total Gas and Adani Green Energy plummeted 5 per cent each and ACC declined by 1.85 per cent.

On the other hand, Moody’s Investors Service Friday revised the outlook on four Adani Group companies to negative from stable, while reaffirming their ratings. The change in the outlook of Adani Green Energy Ltd (AGEL); Adani Green Energy Restricted Group comprising Adani Green Energy (UP) Ltd, Parampujya Solar Energy Pvt Ltd and Prayatna Developers Pvt Ltd; Adani Transmission Step-One Ltd (ATSOL) and Adani Electricity Mumbai Ltd (AEML) is either due their limited ability to manage increase in funding cost or reduced funding access.

Shares of Adani group companies came under heavy selling pressure on the stock exchanges on January 24, 2023 after a report from New York-based Hindenburg Research alleged “brazen stock manipulation and accounting fraud scheme” over the course of decades by the group.

MSCI also announced that Bank of Baroda and CG Power & Industrial Solutions have been added to the MSCI India index, while Biocon has been removed.

Earlier this week, Moody’s in a report had said that the domestic banks’ exposure to the Adani Group is not large enough to affect their credit quality materially. However, if domestic banks become the main source of funding for the Adani Group, it could lead to increase in banks’ exposures to the Group and greater risks for them, the rating agency had said.

Last week, S&P Global Ratings revised the rating outlook of Adani Electricity Mumbai Ltd and Adani Ports and Special Economic Zone Ltd to negative from stable, but reaffirmed their ratings.