According to an analyst to be published in SmartKarma, some stocks in billionaire Gautam Adani’s group on Tuesday adjusted 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%.
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 indices. 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 Adani’s companies Stocks such as Reliance Industries Ltd are vulnerable to external swings due to relative low liquidity, which favors the fortunes of multi-billionaire peer Mukesh Ambani.
Brian Freitas, an analyst at independent research platform SmartKarma, said over the phone, “Adani Green spoiled sentiment for the group’s shares as it lost weight in the MSCI India index.” inclusion in the same index.”
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. This brought his fortune closer to that of a fellow countryman and Asia’s second richest man, Mukesh Ambani.
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.
Shares of Adani Enterprises Ltd and Adani Ports and Special Economic Zone Ltd ended the day slightly higher, dodging Tuesday’s 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.
“It is very difficult to get any information because there is hardly any analyst covering some of the group’s stocks,” Freitas said. “Evaluation versus peering illustrates the difference between heaven and earth.”
Abhilash Pagaria, an analyst at Edelweiss Alternative and Quantitative Research, wrote in a note earlier this 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.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.