After rejig, FTSE intends to proceed with index review changes for Adani Group stocks

The Financial Times Stock Exchange (FTSE) has hinted at its plan to proceed with the scheduled index review changes for Adani Group (India) and its associated securities. However, the London-based exchange also takes note that trading in Adani stocks has currently been restricted due to its daily price limits.

On Friday, FTSE said, it “would like to confirm that it intends to proceed with the scheduled index review changes for the Adani Group (India) and its associated securities in line with index methodologies and policy guides, effective Monday 20 March 2023.”

This would include all members and weight changes scheduled within the market cap and non-market cap indices.

However, the exchange which is informally known as ‘Footsie’,  also took note that trading in Adani Group (India) and its associated securities are currently restricted due to the respective daily price limits being hit.

Should such restriction compromise the replication of indices in the upcoming March 2023 rebalance? On this, FTSE said, it will review on a case-by-case basis and announce any updates in advance of the review in line with the Index Policy in the Event Clients are Unable to Trade a Market or a Security.

Earlier this week, FTSE Russel added 10 Indian stocks to its Global Large-cap index as part of its semi-annual index review.

Under the 10 Indian stocks list, Adani’s cement company ACC which it owns majorly through Ambuja Cement — is included.

Adani holds a 63.15% stake in Ambuja Cement which in turn owns 50.05% in ACC Limited. Adani directly owns a 6.64% stake in ACC.

Other Indian stocks that are included in the large-cap index list by FTSE are — Kotak Mahindra Bank, Canara Bank, IDBI Bank, YES Bank, Union Bank of India, Indian Hotels, Jindal Steel & Power, Shriram Finance, Trent, and Tube Investments.

ACC, Canara Bank, Shriram Finance, Yes Bank, and JSPL entered the large-cap list after being excluded from the midcap list.

However, FTSE Russel did not take any action on Adani stocks in its semi-annual index review.

Earlier, on January 31, following the Adani – Hindenburg row, the London-based exchange advised that the Adani index constituents within the FTSE Russell indices will continue to remain eligible following the underlying index methodologies (subject to satisfying all index inclusion criteria).

However, FTSE also said it will continue to monitor publicly available information on the company, in particular by the Indian regulatory authorities, for any developments.

FTSE on Friday said, “further to the index announcement on 31 January 2023, FTSE Russell has been monitoring and reviewing publicly available information relating to the Adani Group (India) and its associated securities.”

Adani stocks faced steep overwrought on exchanges after a US-based short-seller’s report that came in late January this year. The so-called Hindenburg report accused billionaire Gautam Adani’s conglomerate of fraud, stock manipulation, and tax evasion among others.

This led to an opening of a pandora’s box for the Adani with the affair spilling into street protests by opposition parties, free falls in securities, and loss of billions of dollars of wealth in not just the group’s stocks but also in companies who have exposure in them. Adani also came under the radar of regulatory authorities.

Now, Adani and Hindenburg’s case is being heard before Supreme Court in India.

Currently, the apex court is looking to form a committee that could assess the market regulatory framework and recommends measures that could be adopted to protect investors in the wake of the Adani-Hindenburg matter. On Friday, the court refused to take suggestions in a ‘sealed cover’ on the panel of experts and ensured to maintain full transparency.

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