Adani Green Energy led the defeat, collapsing a record 12%.
Some stocks that make up billionaire Gautam Adani’s conglomerate took a beating on Tuesday as investors adjusted their positions to reflect changes in composition and weights in the MSCI India Index, according to an analyst publishing on Smartkarma.
Adani Green Energy Ltd., the group’s largest company by market value, led the way, plunging a record 12% in trading volume, about nine times the average of the past three months. Adani Total Gas Ltd. Adani Transmission Ltd. and Adani Power Ltd. fell by at least 5% each.
MSCI Inc. released additions and deletions to its global indices last month, but the announcement did not detail changes to individual stock weights in its indexes. The changes came into effect at the close of trading Tuesday, with analysts saying Adani Green’s weight in the MSCI India Index was reduced as it admitted new shares. Emails to the Adani group and MSCI went unanswered outside office hours.
The moves underscore how shares of Adani’s companies are vulnerable to excessive swings, exacerbated by lower liquidity compared to that of stocks such as Reliance Industries Ltd., which supports the fortune of multi-billionaire peer Mukesh Ambani.
“Adani Green soured sentiment for the group’s shares as the downgrade in the MSCI India Index took effect,” Brian Freitas, analyst for independent research platform Smartkarma, said by phone. “Adani Power saw profit taking as it had accrued before it was included in the same index.”
Although Adani is still among the top 10 richest people in the world, his wealth fell by $3.7 billion yesterday, according to the Bloomberg Billionaires Index. That brought his fortune closer to that of Mukesh Ambani, a compatriot and the second richest person in Asia.
A stock rally in the companies of the port-to-power conglomerate had put Adani ahead of Ambani as Asia’s richest person earlier this year.
Shares of Adani Enterprises Ltd. and Adani Ports and Special Economic Zone Ltd. dodged Tuesday’s sell-off to close the day slightly higher.
Lack of analyst coverage and high valuations of 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’s very difficult to get information as there are hardly any analysts covering some of the group’s stocks,” Freitas said. “Ratings versus peers show the difference between heaven and earth.”
Following the change in Adani Green’s weight in the MSCI India Index, the stock could see an outflow of about $220 million, Abhilash Pagaria, an analyst at Edelweiss Alternative & Quantitative Research, wrote in a note earlier this month.
