More trouble for Adani as MSCI probes free float of group stocks

The crisis-hit Gautam Adani Group has suffered another blow following the US short-seller Hindenburg report. In fact, global index provider Morgan Stanley Capital International (MSCI) has asked to review the securities of Adani Group.

The MSCI announced that it would be reviewing the free float of the Adani Group and stated that some of the group’s securities would no longer be considered as free float. Index provider MSCI has clearly stated that it believes that some securities of Adani Group should not be part of the free-float. If MSCI decides to reduce the shares under free-floating, then its wider impact can be seen on the shares of Adani Group.

This news caused a slowdown in the performance of Adani’s shares, leading to a decline of up to 15% for Adani Enterprises when the market opened on Thursday. 9 out of 10 Adani shares opened with a red mark, indicating a drop in value.

Global large investors invest considering MACI as a benchmark index. On the basis of this, these investors invest in the markets around the world. Whenever a stock is included or removed from the MSCI index, its effect is seen on the price of the shares. Foreign investors invest in the shares which are included and those which are removed are sold. MSCI decides on inclusion or removal of stocks from the index every six months or quarterly.

Free-floating shares are those shares which are available for trading. MSCI considers those shares as free-float which are placed in the market for foreign investors to buy. 8 companies of Adani Group are included in this MSCI index which does not include NDTV and Adani Wilmar. After the announcement of review on the placement of Adani Group stocks in the MSCI index, there has been a big decline in the stocks of the group again on Thursday. Stocks of Adani Group have closed down by 11 per cent.