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Two Adani Group firms dropped from MSCI’s India gauge

The move may deal a blow to the stocks trying to recover from the rout triggered by a short-seller report earlier this year. PHOTO: REUTERS

MUMBAI - Global index manager MSCI will exclude two Adani Group firms from its India gauge, potentially dealing a blow to their stocks that are trying to recover from the rout triggered by a short-seller report earlier this year.

Adani Transmission and Adani Total Gas will drop out of the India index effective at the close of trading on May 31, according to a statement issued by MSCI on Thursday as a part of its quarterly comprehensive index review. The exclusion follows changes in MSCI’s calculation on the amount of shares considered freely tradable in the public market for the two companies.

The action from the index provider firm comes as billionaire Gautam Adani’s conglomerate is seeking to raise funds in what will be a major test of investor confidence in the group. Allegations of market manipulation and accounting fraud by Hindenburg Research in late January wiped out more than US$150 billion (S$199.7 billion) from the group’s value at one point. The Adani Group has denied the allegations.

The sell-off has eased in recent weeks as Mr Adani has been trying to win back the market’s trust with a series of investor roadshows, early debt repayments and plans to scale back its pace of spending on new projects.

MSCI said earlier this month that it will implement weighting cuts for Adani Transmission and Adani Total Gas in its indexes. The reduction was initially announced in February, shortly after Hindenburg’s scathing report on the group, but its implementation was postponed. BLOOMBERG