NEW DELHI: Two Adani group stocks - Adani Transmission and Adani Total Gas - will be completely removed from the MSCI Global Standard index as part of the index provider’s review and rebalancing announced on Friday. The changes will be effective from June 1.
After the massive sell-off following the stinging report of Hindenburg Research, the two companies don’t meet the relevant free float-adjusted market capitalisation requirements of MSCI (Morgan Stanley Capital International).
The two stocks will also be removed from other related indices such as MSCI Global Investable Market Indexes (GIMI), MSCI Factor, MSCI ESG, MSCI Thematic and MSCI Capped Indexes.
According to the estimates by Nuvama Alternative & Quantitative Research, Adani Total Gas and Adani Transmission could see a cumulative net outflow of $387 million as the MSCI Global Standard index is tracked by passive index funds. Adani Transmission could see a fund outflow of $201 million while Adani Total Gas may see a sell-off of $186 million.
As this move was expected by MSCI, shares of the two Adani firms plummeted between 3-4% on Friday.
Adani Total Gas and Adani Transmission shares are down 77% and 65%, respectively, since the beginning of this year after a report by United States-based Hindenburg Research accused the port-to-power conglomerate of manipulating stock prices.
Besides the two Adani firms, MSCI is also removing Indus Tower from the index, a move that may result in a sell-off of shares worth $84 million. Meanwhile, MSCI has added three stocks -- Max Healthcare, Hindustan Aeronautics and Sona BLW Precision Forgings. This may help Max Healthcare to see an inflow of $295 million, Hindustan Aeronautics $195 million and Sona BLW Precision Forgings $175 million.
MSCI in February this year had announced lowering the weightages of some Adani group companies after reviewing the free float status over market participant feedback following the Hindenburg allegations.
Two Adani stocks may see fund outflow
As per Nuvama Alternative & Quantitative Research estimates, Adani Total Gas and Adani Transmission could see a cumulative net outflow of $387 million as the MSCI Global Standard index is tracked by passive index funds. Adani Transmission could see a fund outflow of $201 million while Adani Total Gas may see a sell-off of $186 million
MSCI Global Standard Index
Inclusion of Indian shares
Max Healthcare
Hindustan Aeronautics
Sona BLW Precision Forgings
Exclusion of Indian shares
Adani Total Gas
Adani Transmission
Indus Tower