Adani stocks decline after global index provider MSCI’s statement on review

Shares of the Adani Group firms fell on Thursday after having risen for two consecutive sessions. The decline in the stocks – with the flagship Adani Enterprises slumping 10.7% to ₹1,927.30 on the BSE – on Thursday was likely triggered after global index provider MSCI informed the market that it was reviewing the shares of the group firms that were in free float in the public markets.

 “MSCI has determined that the characteristics of certain investors have sufficient uncertainty that they should no longer be designated as free float pursuant to our methodology,” MSCI said early on Thursday. “This determination has triggered a free float review of the Adani Group securities,” it added

After the MSCI statement, the stocks of the 10 listed firms belonging to the Gujarat-based conglomerate came under pressure and nine firms saw their stocks fall between 3% AND 10% while only Adani Wilmer ended in the green, climbing 5%.

Following the MSCI statement, U.S. based Hindenburg Research founder Nathan Anderson was quick to respond on Twitter saying, “We view this as validation of our findings.”

As per market sources, eight out of 10 Adani Group stocks are part of the MSCI index, with close to $2 billion of passive investments in them and any adverse decision by the index provider would likely put more pressure on the stocks in coming days.

MSCI’s review of the Adani stocks came following a scathing report by the Hindenburg Research released on January 24, accusing the conglomerate of “accounting fraud and stock price manipulation” while raising concerns about the “substantial debt” of the group.

The allegations have strongly been denied by the group. S&P Global Ratings downgraded Adani Ports and Special Economic Zone, and Adani Electricity to “negative” from “stable”. And TotalEnergies has put on hold its $4 billion investment in the Adani Group for hydrogen manufacturing

Norway’s sovereign wealth fund on Thursday said it had sold its stakes in three Adani Group companies since the start of the year, worth about $200 million, as per a Reuters report.

At the end of 2022, the $1.35 trillion fund held stakes in Adani Total Gas, Adani Ports & Special Economic Zone and Adani Green Energy.

“Since the year-end, we have further reduced in Adani companies. We have no exposure left,” Christopher Wright, the fund’s head of ESG risk monitoring was quoted by Reuters as saying. 

“We have monitored Adani for many years (on ESG) issues, [and] on their handling of environmental risks,” he added. 

(With inputs from Reuters)