Adani Enterprises' shares plunged 20 per cent at opening trade on Thursday, but recovered sharply on the back of MSCI's announcement to review its free-float status. The stock made a quick rebound to coup all the early cuts for the day.
MSCI Morgan Stanley Capital International said that certain investors in Adani Group securities should no longer be designated as free float, and it is reviewing this status. The changes would be announced later in the day.
At the beginning of Thursday's session, the shares of Adani Enterprises plunged 20 per cent to Rs 1,726. The stock made a rebound of 25 per cent at Rs 2,200 during the day. On Wednesday, 65 people were present.
Adani Enterprises has gone up 116 per cent in just five sessions from its 52 week low of Rs 1,017 on Friday, February 2023. The stock is still 49 per cent less than its 52 week high of Rs 4,189, which is close to the stock's 52 per cent. MSCI defines free float as the proportion of shares outstanding that are available for purchase in the public equity markets by international investors. MSCI is an index provider and a number of Adani Group companies are part of its various indices.
If the weightage of Adani Group companies is changed on MSCI's indices, it could lead to a significant outflow from the company. This is because a number of passive funds invest according to the weight of the funds and any rejig in the weight of the company may lead to a change in investment by the funds.
The group led by billionaire Gautam Adani has been in crisis since US short-seller Hindenburg Research released a report in January 2023 accusing the conglomerate of improper use of offshore tax havens and stock manipulation.
Hindenburg Research's founder, Nate Anderson, said on Thursday that MSCI's latest release on Adani validates the short seller's findings on offshore stock parking by the Adani GroupAdani Group.
Bank of Baroda is not worried about its exposure to the tumult-hit Adani Group.