Msci: MSCI defers rejig for 2 Adani stocks

MUMBAI: MSCI, one of the major global index providers, on Thursday said it was deferring changes it had announced for two Adani Group companies — Adani Total Gas and Adani Transmission — since these are under ‘price limit mechanisms’. On February 9, MSCI had said it was reducing weightage of four Adani Group companies — other two being flagship Adani Enterprises and ACC — effective February 28. The decision by MSCI is expected to temporarily defer any additional selling in Adani Total Gas and Adani Transmission that could have come on February 28 due to the index provider’s decision announced last week. A lower weightage had meant that fund managers who had benchmarked their portfolios to these MSCI indices had to compulsorily reduce the share of these stocks in their funds.

Currently, Adani Total Gas, Adani Transmission and Adani Enterprises are under the additional surveillance measure (ASM) of exchanges. ASM is an automatic, data-driven risk mitigating measure that usually leads to higher margins and limits price fluctuation for stocks that are under it.
MSCI also indicated that since fund managers who have benchmarked their funds to some of its indices may face issues in replicating Adani Group’s stocks in their portfolios due to ongoing uncertainties, it will apply special treatment to these scrips. MSCI will not make any changes like additions, deletions, constraint factor changes in some of its indices like Factor, ESG, Thematic and Capped indices for eight Adani Group securities, a release from the index provider said. These eight stocks are: ACC, Adani Enterprises, Adani Green Energy, Adani Ports & SEZ, Adani Power, Adani Total Gas, Adani Transmission and Ambuja Cements.
MSCI will have a relook atits stand relating to these stocks in its May 2023 review, which is part of its bi-annual process. Every year, MSCI reviews its indices in May and November. MSCI will continue to monitor “information that may impact the eligibility” of Adani Group’s stocks for its Global Investable Market Indexes or estimates of their free float. “MSCI welcomes feedback from all market participants and investors and will communicate further as necessary or appropriate,” it said. On February 8, MSCI had said that it will update foreign inclusion factors (FIFs) of some Adani companies as part of its index review after it got feedback from its users that some of the stocks that it considered to be ‘free float’, may not be true. In index parlance, ‘free float’ usually means stocks held by non-promoter investors.