Shares of Adani Total Gas and Adani Transmission took a hit in morning trade on Friday following the announcement by MSCI that the two companies would be removed from the MSCI India Index, effective May 31. Adani Total Gas saw its stock plummet 5% to ₹812.60, hitting its lower circuit limit on the BSE, while shares of Adani Transmission fell 5% to hit their lowest trading permissible limit for the day at ₹871.15. Additionally, Indus Towers will also be removed from the index, and its shares fell 2.34% to ₹147.90 on the BSE.
The MSCI India Index is widely used by global fund houses for benchmarking global equities portfolios, and its constituents are closely watched by investors. The three firms set to be added to the index are Hindustan Aeronautics, Max Healthcare Institute, and Sona BLW Precision, according to the May 2023 index review announced on Thursday.
According to Deepak Jasani, Head of Retail Research at HDFC Securities, “MSCI has announced the addition of Max Healthcare, Hindustan Aeronautics, and Sona BLW Precision to its India Index, as part of May 2023 rejigs. On the other hand, Adani Transmission, Adani Total Gas, and Indus Towers have been deleted from the MSCI India Index.”
The MSCI India Index review takes place four times a year and considers factors such as market capitalization, liquidity, and foreign ownership limits. The index is used as a benchmark by global investors, and changes to the index’s constituents can have a significant impact on the stocks involved. The removal of Adani Total Gas, Adani Transmission, and Indus Towers from the index could lead to selling pressure on the stocks, as passive funds tracking the index may need to sell the shares to rebalance their portfolios.
