Shares Of Adani Group Rebound As MSCI Delays Index Weighting Changes

Adani Enterprises, Adani Wilmar, Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Ports, ACC, and Ambuja Cements surged between 1 per cent and 5 per cent in early trade

Index provider MSCI has said that it will postpone implementation of updates to weightings for two Adani Group companies – Adani Total Gas and Adani Transmission – to the May benchmark review, as reported by news agency Reuters.

According to the report, Adani Group shares were upbeat in trade after the announcement by MSCI.

Adani Enterprises, Adani Wilmar, Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Ports & Special Economic Zone, ACC, and Ambuja Cements surged between 1 per cent and 5 per cent in early trade.

The reversal of the updates to Adani Total Gas and Adani Transmission in the February index review will be reflected in the MSCI Index Product files starting from February 16, MSCI said.

MSCI will also apply a special treatment for all Adani Group's associated securities in the MSCI Equity Indexes starting from February.

Last week, MSCI said it would cut the weightings of four Adani Group companies, including flagship firm Adani Enterprises, in its indexes after reassessing the number of shares that are freely traded.

The new index weightings were due to come into effect on March 1 but the proposed changes to Adani Total Gas and Adani Transmission will be delayed until May. MSCI said "potential replicability issues" are behind the decision. Its methodology calls for indexes to be replicated "in an actual portfolio in a cost efficient matter."

MSCI did not immediately respond to a Reuters request for comment on why the changes were reversed shortly after being announced last week. The changes to the weightings of Adani Enterprises and ACC, a major Indian cement company the Adani Group acquired from Holcim last year, are still due to go ahead.

MSCI examined the size of companies' free floats, having determined there was "sufficient uncertainty" surrounding some investors in Adani companies.

The MSCI decision came after January 24 report by US short seller Hindenburg Research that accused the Indian conglomerate of improper use of offshore tax havens and stock manipulation. The group has denied any wrongdoing.

The Hindenburg report has plunged Adani stocks, led by billionaire Gautam Adani, into crisis, wiping some $120 billion off the value of the group's companies. Adani and two of its main subsidiaries caught up in a short-selling storm in recent weeks are to hold calls with bond investors on February 16 and February 21, according to a document seen by Reuters.