People walk past a screen displaying Adani Group news inside the BSE building in Mumbai, India, Thursday, February 2, 2023.
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index provider MSCI It said it will cut the weight of four companies of the Adani group, including the flagship firm Adani Enterprisesin its index after revaluation of the number of freely traded shares.
The move comes in the wake of a January 24 report by US short seller Hindenburg Research, which accused the Indian conglomerate of improper use of offshore tax havens and stock manipulation. The group has denied any wrongdoing.
The Hindenburg report has thrown the billionaire Gautam Adani-led conglomerate into jeopardy, wiping off nearly $110 billion from the value of the group’s top seven listed firms.
Apart from Adani Enterprises – the group’s coal-miner-cum-incubator for new projects, MSCI is also planning to cut loads for Adani Total Gas – a venture with France total energy And Adani TransmissionAn electricity transmission company.
load will also be less accAdani Group, a major Indian cement company, acquired Holcim last year and is not one of the group’s core seven listed firms.
Adani Group did not immediately respond to a request for comment from Reuters on Friday.
The total weighting of the four companies was 0.4% MSCI Emerging Markets Index Till 30 January. The changes have come into effect from March 1.
“The lower free float would require passive investors to sell the stock to reduce their tracking error with the index,” said Brian Freitas, analyst with Periscope Analytics, who published on SmartKarma.
“This may lead to earlier selling from active investors as they try to sell before passive ones.”