Adani Group firms take a hit as MSCI announces a weighting reduction.

After revaluing the number of freely traded shares, index provider MSCI said it will reduce the weighting of four Adani Group companies, including flagship Adani Enterprises, in its indices.
The move follows a January 24 Hindenburg Research, a US short seller, accused the Indian conglomerate of abusing offshore tax havens and stock manipulation. The group denied wrongdoing.
The Hindenburg report plunged the billionaire group led by Gautam Adan into crisis, wiping about $110 billion off the value of the group’s seven most important listed companies.
Adani Enterprises Group, coal miner and new project co-incubator: In addition, MSCI intends to reduce its investment in Adani Total Gas, a joint venture between Total Energies of France and Adani Transmission.
It also undervalues ACC, India’s largest cement company, which was bought by Adani Group from Holcim last year but is not among the group’s top seven listed companies.
Adani Group did not immediately respond to Reuters’ request for comment on Friday.
The share of these four companies in the MSCI Emerging Markets Index was 0.%4 on January 30. The changes will take effect on March 1.
“With a lower market cap, passive investors need to sell stocks to reduce index tracking errors,” said Brian Freitas, an analyst at Periscope Analytics, which publishes Smartkarma.
“Active investors can sell before they try to sell to passive investors.”

Source:Reuters