MSCI postpones index weightage changes for 2 Adani Group companies

Index provider MSCI will postpone the implementation of updates to weightings for two Adani Group companies – Adani Total Gas and Adani Transmission – to May 2023 Index review.

The reversal of the updates to these two securities in the February 2023 Index Review will be reflected in the MSCI Index Product files starting today, MSCI said.

On February 8, MSCI had announced that it will update the Foreign Inclusion Factors (FIFs) of specific securities associated with the Adani Group as part of the February 2023 Index Review following a free float review. "In light of potential replicability issues due to impact from price limit mechanisms in specific securities associated with the Adani Group, MSCI will postpone the implementation of such previously announced updates to the FIFs for the below securities to the May 2023 Index Review," the index provider said.

MSCI will also apply a special treatment for all Adani Group's associated securities in the MSCI Equity Indexes starting from the February 2023 Index Review. This, according to MSCI, comes in light of "potential replicability issues" as well as ongoing uncertainty with relation to key input data for index construction for the Adani Group's associated securities.

The index provider said it will not implement any updates such as additions, deletions, constraint factor changes in non-market capitalisation weighted indexes and custom indexes such as the MSCI Factor, ESG, Thematic and Capped Indexes for securities of ACC, Adani Enterprises, Adani Green Energy, Adani Ports and SEZ, Adani Power, Adani Total Gas, Adani Transmission, and Ambuja Cements. Implementation of such changes for these securities in non-market capitalisation weighted indexes and custom indexes will resume at the May 2023 Index Review.

Last week, MSCI said it would cut the weights of four Adani Group companies – Adani Enterprises, Adani Total Gas, Adani Transmission, and ACC – after reviewing the free float of these companies. These companies had a combined 0.4% weighting in the MSCI emerging markets index as of January 30. The new index weights were due to come into effect on March 1.

MSCI said it will review the treatment of non-neutral corporate events for the affected securities on a case-by-case basis and potentially defer their implementation. The index provider said it continues to monitor information that may impact the eligibility of the relevant securities for the MSCI Global Investable Market Indexes or estimates of their free float.

Reacting to the development, shares of Adani Group companies rose on Thursday. Adani Transmission gained as much as 3% to ₹1,068 apiece on the National Stock Exchange (NSE) in opening trade. Adani Enterprises, the conglomerate's flagship firm, rose 3% to ₹1,866 apiece. Adani Power reversed its losing streak by hitting 5% upper circuit to ₹148 per share.