The Adani group stocks erased nearly all their two-day gains on Thursday after MSCI flagged the uncertain "investor characteristics" of some investors in group stocks which could impact how the index provider calculates the free float in them and potentially lead to weighting cuts and foreign investor outflows from funds that track the indices.
MSCI is the world's leading provider of indices across equities, real estate, fixed income, ESG and others. Investors and fund managers around the world rely on MSCI products to allocate capital. This gives equities included in MSCI indices a measure of validation around the world.
The outcome of the evaluation will be announced at 4am on Friday. Market experts predict that the outflows could range from several million dollars to more than half a billion, depending on the modifications, which will become effective at the end of May.
The term 'free float' here refers to the portion of a company's shares accessible to international buyers. On 27 January, MSCI sought feedback from market participants in response to allegations made by US short-seller Hindenburg Research, which claimed that certain Mauritian funds were used as parking entities for Adani shares. MSCI has since reviewed these issues.
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