Adani Transmission’s share price opened at its 5 per cent upper circuit of ₹816.40 on BSE on Thursday (June 1) after suffering losses in the last five consecutive sessions. In the last five sessions of losses, the stock declined nearly 15 per cent.
Besides, shares of Adani Total Gas also rose about five per cent in early deals after suffering losses in the last four consecutive sessions which dragged the stock over 16 per cent lower.
The recent fall in these two stocks could be attributed to the MSCI index rejig.
MSCI Global Standard Index’s latest rejig came into effect on May 31, when three stocks – Adani Transmission, Adani Total Gas and Indus Towers – were excluded from the index. On the other hand, three stocks Max Healthcare Institute, Hindustan Aeronautics, and Sona BLW Precision were included in the index.
According to Nuvama Alternative & Quantitative Research report, Adani Transmission will see an outflow of $189 million as it will exit the index. While Adani Total Gas will record an outflow of $167 million. Together, the two Adani firms will likely see an outflow of $356 million.
MSCI or Morgan Stanley Capital International is a global index provider. It tracks the performance of stocks and acts as a base for exchange-traded funds.
Global passive investors like index funds and exchange-traded funds (ETFs) see MSCI Indices as the benchmark for the allocation of funds. This is why when changes occur or stock composition is rejigged in the MSCI Indices, the stocks see inflow or outflow according to their weight in the index.
The MSCI indices are market capitalization-weighted indices. Stocks selected for its equity indices are the ones which are easily traded and have high liquidity. The highest weightage on the index is given to the stock with the largest market capitalization.
MSCI India Index is reviewed four times in a year – February, May, August and November.
Meanwhile, Adani Transmission’s owners earned a consolidated net profit of ₹389.45 crore in the fourth quarter of FY23, registering a growth of 69.62 per cent from ₹229.59 crore in the same quarter a year ago. However, the performance declined by 17.96 per cent from a PAT of ₹474.72 crore in the preceding quarter. The Adani Group-backed company’s cash profit surged by 28 per cent YoY to ₹977 crore.
Adani Total Gas, the joint venture between Adani Group and French energy giant Total S.A., registered a 21 per cent rise in consolidated net profit at ₹97.91 crore for the quarter ended March against ₹81.09 crore in the corresponding quarter of FY2022. Its consolidated revenue from operations for the quarter jumped 12.4 per cent to ₹1,197.3 crore compared to ₹1,065.5 crore in the previous year.