MSCI noted that in light of potential replicability issues, the implementation of changes to the Foreign Inclusion Factors (FIFs) for Adani Total Gas and Adani Transmission were postponed to the May 2023 Index Review. Shares of Adani Transmission and Adani Total Gas took a beating on Monday morning after index aggregator MSCI cut weights of Adani Transmission, Adani Total Gas in its May index review process. The results of the May 2023 Index Review and pro forma index composition changes for the MSCI Global Investable Market Indexes will be announced on May 11, it said.
Adani Transmission shares hit their 5 per cent lowe circuit limit at Rs 949.30 on BSE. The Adani Total Gas stock also hit its 5 per cent lower circuit limit at Rs 872.35.
MSCI noted that in light of potential replicability issues, the implementation of changes to the Foreign Inclusion Factors (FIFs) for Adani Total Gas and Adani Transmission were postponed to the May 2023 Index Review. MSCI said the previously announced FIF changes for the two securities will being implemented in the May 2023 index review. MSCI said it has cut Adani Total Gas' FIF to 0.14 from 0.25 and Adani Transmission to 0.10 from 0.25.
MSCI defines the FIF of a security as the proportion of shares outstanding that are deemed to be available for purchase in the public equity markets by international investors.
For the remaining Adani securities, MSCI will continue to apply the FIF implemented as part of the February 2023 index Review. Therefore, there will be no change in the FIF as part of the May 2023 index review for ACC, Adani Enterprises, Adani Green Energy, Adani Ports, Ambuja Cements and Adani Power, it said. Most of these stocks were trading lower in early trade.
"The announcement will also include the implementation treatment MSCI would apply were further replicability issues to arise from any of the price limit mechanisms potentially affecting Adani securities," MSCI said addnig that MSCI will review the treatment of non-neutral corporate events for the affected securities on a case-by-case basis and potentially defer their implementation, until otherwise announced.
"The treatment of any such non-neutral corporate event would be announced to all clients with advance notice through regular Index announcements. For the avoidance of doubt, MSCI will continue implementing any neutral corporate events including ones requiring application of a Price Adjustment Factor (PAF)," MSCI said.
MSCI said it welcomes feedback from all market participants and investors on these issues and will communicate further as necessary or appropriate.