MSCI Adani rejig: Adani shares had to face heavy route after the Hindenburg Research report raising concern over the debt positioning of Gautam Adani-led companies. However, it seems that Adani group companies have to face another challenge after dropping of two Adani group companies — Adani total Gas and Adani Transmission from the Morgan Stanley Capital International (MSCI) index in May 2023. The MCI rejig weighed heavily on the Adani group of companies as Adani shares logged worst week after the late February 2023 as the Gautam Adani-led companies lost over $10 billion market capital in the week gone by.
Adani group’s market capitalisation nosedived around $10.1 billion to $107 billion in the week gone by, with Adani Total Gas and Adani Transmission — two stocks to be dropped by MSCI — headed for their worst weeks since late February. The MSCI exclusions will probably trigger around $390 million of selling by global passive funds later this month, said Brian Freitas, an independent equities analyst who publishes on Smartkarma.
Adani group’s flagship company Adani Enterprises logged to the tune of 4 per cent weekly loss, the most since March. The company and its transmission unit last week flagged plans to raise $2.6 billion in a qualified institutional placement or other modes, triggering concerns of equity dilution.
“If the shares are priced too low in a QIP issue, it could be seen as a sign of weakness or desperation,” Arpit Shah, a fund manager at Care Portfolio Managers said in an by email.
The Hindenburg Research report on Adani group of companies in January wiped out over $150 billion from the group’s market value by late February. These losses were trimmed during the last two months as emerging market investor GQG Partners in early March bought stakes in four entities. This led to bounce back in some Adani group shares.
However, Gautam Adani and his fleet of lieutenants have been denying the allegations labelled by the US short seller, while taking steps in the aftermath of the report to assuage investor concerns over debt and corporate governance.
(With inputs from Bloomberg)
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