Mumbai: Some stocks that billionaires own gautam adaniAccording to an analyst to be published in SmartKarma, investors hit the conglomerate on Tuesday to adjust their holdings to reflect changes in the composition and weights in the MSCI India index.
Adani Green Energy Ltd, the group’s largest firm by market cap, led the way with a record 12% drop in trading volume, nearly nine times the average of the past three months. Adani Total Gas Ltd., Adani Transmission Ltd. and Adani Power Ltd. each fell at least 5%. Most of these stocks extended losses in early trade in Mumbai on Wednesday.
MSCI Inc. published additions and deletions to its global indices last month, but the announcement did not detail changes in the weighting of individual stocks in its index. The changes took effect at the end of trading on Tuesday and analysts said Adani Green lost weight in the MSCI India index as it accepted fresh shares. Emails sent to Adani Group and MSCI did not elicit any response outside business hours.
The moves outline how shares of AdaniU.S. companies are vulnerable to sizable swings, compounded by less liquidity than stocks such as Reliance Industries LimitedWhich supports the fortunes of multi-billionaire colleague Mukesh Ambani.
“Adani Green spoiled sentiment for the group’s shares as it lost weight in the MSCI India index,” Brian Freitas, analyst at independent research platform SmartKarma, said over the phone. “Adani Power saw gains as it rose even before it was included in the same index.”
A stock rally in the port-to-power group companies earlier this year had propelled Adani ahead of Ambani to become Asia’s richest man. Adani is among the top-10 richest people in the world, the Bloomberg Billionaires Index shows, but his wealth declined by $3.7 billion yesterday.
Abhilash Pagaria, an analyst at Edelweiss Alternative and Quantitative Research, wrote in a note last month that following the change in the weight of Adani Green in the MSCI India Index, the stock could see an outflow of around $220 million.
Shares of Adani Enterprises Ltd and Adani Ports and Special Economic Zone Ltd have deferred selloff.
The lack of analyst coverage and high valuations on some of the group’s stocks such as Adani Green, Adani Total Gas and Adani Enterprises have baffled some market participants in the past.
A small number of foreign funds hold a significant portion of Adani Group shares, which creates concentration risk, said Nitin Chanduka, a strategist at Bloomberg Intelligence. “Having even a large majority of shares in some funds reduces the effectiveness of public floats, posing a risk of asymmetric volatility in stocks.”
Freitas echoed these views.
“It is very difficult to get any information as there is hardly any analyst covering some of the group stocks. “Evaluation versus peering illustrates the difference between heaven and earth.”
Adani Green Energy Ltd, the group’s largest firm by market cap, led the way with a record 12% drop in trading volume, nearly nine times the average of the past three months. Adani Total Gas Ltd., Adani Transmission Ltd. and Adani Power Ltd. each fell at least 5%. Most of these stocks extended losses in early trade in Mumbai on Wednesday.
MSCI Inc. published additions and deletions to its global indices last month, but the announcement did not detail changes in the weighting of individual stocks in its index. The changes took effect at the end of trading on Tuesday and analysts said Adani Green lost weight in the MSCI India index as it accepted fresh shares. Emails sent to Adani Group and MSCI did not elicit any response outside business hours.
The moves outline how shares of AdaniU.S. companies are vulnerable to sizable swings, compounded by less liquidity than stocks such as Reliance Industries LimitedWhich supports the fortunes of multi-billionaire colleague Mukesh Ambani.
“Adani Green spoiled sentiment for the group’s shares as it lost weight in the MSCI India index,” Brian Freitas, analyst at independent research platform SmartKarma, said over the phone. “Adani Power saw gains as it rose even before it was included in the same index.”
A stock rally in the port-to-power group companies earlier this year had propelled Adani ahead of Ambani to become Asia’s richest man. Adani is among the top-10 richest people in the world, the Bloomberg Billionaires Index shows, but his wealth declined by $3.7 billion yesterday.
Abhilash Pagaria, an analyst at Edelweiss Alternative and Quantitative Research, wrote in a note last month that following the change in the weight of Adani Green in the MSCI India Index, the stock could see an outflow of around $220 million.
Shares of Adani Enterprises Ltd and Adani Ports and Special Economic Zone Ltd have deferred selloff.
The lack of analyst coverage and high valuations on some of the group’s stocks such as Adani Green, Adani Total Gas and Adani Enterprises have baffled some market participants in the past.
A small number of foreign funds hold a significant portion of Adani Group shares, which creates concentration risk, said Nitin Chanduka, a strategist at Bloomberg Intelligence. “Having even a large majority of shares in some funds reduces the effectiveness of public floats, posing a risk of asymmetric volatility in stocks.”
Freitas echoed these views.
“It is very difficult to get any information as there is hardly any analyst covering some of the group stocks. “Evaluation versus peering illustrates the difference between heaven and earth.”