Shares of Adani Transmission and Adani Total Gas were under pressure on Monday after index provider Morgan Stanley Capital International (MSCI) cut weights of these Adani Group firms in its May index review.
Adani Total Gas and Adani Transmission, both, hit their 5 percent lower circuit to trade at ₹872.75 and ₹949.30, respectively. Other Adani Group stocks were also trading lower aftr this announcement.
Adani Green fell 3.8 percent to its intra-day low of ₹903.80, Adani Enterprises shed 2.4 percent to ₹1,875, meanwhile, Adani Power and Adani Wilmar fell between 1 and 2 percent in intra-day deals. Adani Ports was the only stock trading in the green.
"In light of potential replicability issues, the implementation of changes to the Foreign Inclusion Factors (FIFs) for Adani Total Gas and Adani Transmission were postponed to the May 2023 index review. The previously announced FIF changes for the two securities will be implemented in the May 2023 index review. We have cut Adani Total Gas' FIF to 0.14 from 0.25 and Adani Transmission to 0.10 from 0.25," said MSCI.
For the remaining Adani securities, MSCI noted that it will continue to apply the FIF implemented as part of the February 2023 index review. Hence, there will be no change in the FIF as part of the May 2023 index review for ACC, Adani Enterprises, Adani Green Energy, Adani Ports, Ambuja Cements and Adani Power, it added.
It also informed that the results of the May 2023 index review and pro forma index composition change for the MSCI Global Investable Market Indexes will be announced on May 11.
According to MSCI, FIF of security is the proportion of shares outstanding that foreign investors can sell or buy in the markets.
MSCI’s indices are used by foreign investors and mutual funds, among others, and the free float cuts in the two Adani group companies could result in outflows of up to $222 million from overseas passive funds, according to IIFL Alternative Research.