Out of MSCI index, two Adani group cos tank
Shares of Adani Total Gas and Adani Transmission fell four percent and three percent to 818 rupees and 885 rupees after MSCI removed both shares from the MSCI India Standard Index on Friday.
Indus Towers, also removed from the index, fell 2 percent to 148 rupees.
The removal from the indices means these stocks will no longer be included in portfolios of funds that track MSCI indices, said Sonam Srivastava, founder of investment advisory firm Wright Research, creating potential selling pressure.
He added that the decrease in the percentage of free circulation of the companies of the Adani Group and the sharp decline in share prices led to the ability of the shares to meet the market capitalization requirements for inclusion in the MSCI indicators of the global investment market.
He said that the exclusion may have an indirect negative impact on other Adani Group shares, as MSCI indices are closely followed by international investors.
MSCI has added Max Health, Sona BLW and HAL to the index which is widely tracked by forex and index funds.
Some of the stocks that have overweighted in the index include Kotak Mahindra Bank, ONGC, Maruti Suzuki, NTPC, Mahindra & Mahindra, Yes Bank, Siemens, Interglobe Aviation, Ultratech Cement, and Zomato.
Other companies that have lost weight in the index include Reliance Industries, Infosys, ICICI Bank, JSW Steel, HDFC and Tata Consultancy Services.
Among the small cap companies, ACE, Anupam Rasayan, Bikaji Foods, Fusion Micro, Gland Pharma, Ircon, Kaynes, Kfin and Maharashtra Seamless Small Cap Index were added.
That aside, NMDC Steel, Syrma SGS, Ujjivan SFB, Power Mech and newly separate RVNL have also been added to the Small Cap index.
Some of the stocks excluded from the small-cap index are Abbott, Astec, Danny, Dilip Buildcon, Gillette, BCJ, Terocare, and Facranger.
Market sentiment towards Adani shares has certainly soured after the group’s saga began in January, Manish Chowdhury, head of research at Stoxbox, said. MSCI’s exclusion will put more pressure on these stocks with $200 million flowing out of these stocks.
“We are more comfortable with the stocks that have been added to the MSCI index given their strong business fundamentals and good margin for future growth and foreign fund inflows should help going forward,” he said.
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MSCI revised the components of its India-based index on Friday. It has added Max Health, Sona BLW and HAL to the MSCI India Standard Index while excluding Indus Towers, Adani Trans and Adani Total.
Some of the stocks that have seen overweight in the index include Kotak Bank, IndiGo, and Zomato.
Among the small-cap companies, ACE, Anupam Rasayan, Bakaji Foods, Fusion Micro, Gland Pharma, Aircon, Keynes, KVN and Mah were also added to the small-cap index.
Apart from that, NMDC Steel, Syrma SGS, Ujjivan SFB, Power Mech and newly separate RVNL have also been added to the Small Cap Index.
Some of the stocks excluded from the small cap index are Abbott, Astec, Dhani, Dilip Buildcon, Gillette, PCJ, Thyrocare, and Vakranger.
The inclusion of stocks in the index will increase the inflow of foreign funds and the potential for stock prices to rise.