Adani Group stocks tumble after MSCI cuts free float

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

The stock prices of companies within the Adani Group dropped significantly following the announcement by MSCI that they would be reducing the amount of freely tradable shares in their calculation. This development has prompted analysts to expect a reduction in the weightages, adding to the market uncertainty.

Adani Enterprises fell 8%, Adani Total Gas dropped 6.4%, Adani Transmission lost 5%, Adani Power dipped 5%, and Adani Wilmar declined 3%. Meanwhile, Adani Green Energy , ACC, NDTV and Ambuja Cement fell 3%, 2%, 2.6% and 0.3%, respectively. On the other hand, Adani Ports gained 0.5%.

MSCI has announced its plans to alter the free float of Adani Enterprises Ltd., Adani Transmission Ltd., Adani Total Gas Ltd., and ACC Ltd. These changes will be put into effect on February 28th.

According to a note by Nuvama Wealth Management, the weighting of Adani Enterprises will decrease by 30 basis points to 0.5% in the MSCI Global Standard Index. The note also stated that the weightings of the other three stocks will also decline, which could result in around $500 million combined outflows from these stocks.

Since January 24th, the stocks of Adani Group companies have experienced a dramatic decline following allegations made by Hindenburg Research, a US-based research firm. The accusations of “stock manipulation and accounting fraud” against the Adani Group have resulted in a sharp erosion of the conglomerate’s market capitalization, wiping out over $117 billion in value. The allegations have created significant market uncertainty and have led to a decline in the stocks’ performance.

Meanwhile, MSCI has also announced that Bank of Baroda and CG Power & Industrial Solutions have been added to the MSCI India index, while Biocon has been removed from the index. As a result, Nuvama Alternative & Quantitative Research predicts that CG Power and Bank of Baroda could see inflows of approximately $161 million and $145 million, respectively. On the other hand, Biocon may experience an outflow of $68 million, according to the same note.

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