MSCI Cuts Free Float of Adani Transmission, Adani Total Gas, Shares Down 5%

Shares of Adani Group Corp slumped on Monday, dragged down by losses in Adani Transmission and Adani Total Gas, which were down 5% at Rs 949.30 and Rs 872.35, respectively, on the BSE.

The sharp drop in both stocks was due to global index provider MSCI’s decision to reduce the companies’ free float as part of this month’s index review.

In a press release on Friday, the index provider said free float for Adani Total Gas and Adani Transmission is now at 14% and 10%, respectively, down from 25%.

According to MSCI, a security’s free float, or foreign inclusion factor (FIF), is the proportion of outstanding shares available for purchase by international investors in the public stock market.

Analysts said the weight of Adani Total Gas and Adani Transmission in MSCI’s benchmark index could now be halved. This will result in the outflow of passive trackers.

Also, other group shares, including Adani Green, Adani Enterprises and Adani Power, were trading down 1.5-3% at the time of writing. NDTV, ACC, Ambuja Cement and Adani Wilmar also recorded small losses.

The said Adani company’s free float has shifted, initially due to be completed in February to be completed in March following a scathing report on the group by US-based short-seller Hindenburg Research.

But in February, MSCI postponed the reduction of the free float of four Adani Group stocks – Adani Enterprises, Adani Total Gas, Adani Transmission and ACC – as the stocks kept hitting the lower circuit, which May cause “reproducibility issues”.

On Friday, MSCI said that the remaining Adani securities would continue to apply the FIF implemented as part of the February 2023 index review. As such, there will be no change to the FIF as part of the May index review for ACC, Ambuja Cements, Adani Enterprises, Adani Green Energy, Adani Ports and SEZ and Adani Power. Adani Wilmar and NDTV are not part of any MSCI indices.

All applicable changes to the MSCI May 2023 Index Review will be made by the close of business on May 31, 2023. The results of the review will be announced on May 11, 2023.