MSCI, the index provider, said on Wednesday that it will postpone the implementation of weighting changes for two Adani Group firms, Adani Total Gas and Adani Transmission, until the May benchmark review.
Following this news, Adani Group shares surged in trading. Adani Enterprises, Adani Wilmar, Adani Green Energy, Adani Transmission, Adani Total Gas, Adani Ports and Special Economic Zone, ACC, and Ambuja Cements all rose between 1 and 5% in early trade on February 15.
The reversal of Adani Total Gas and Adani Transmission updates in the February index review will be reflected in the MSCI Index Product files beginning February 16, according to MSCI.
MSCI will also provide all Adani Group-related securities preferential treatment in the MSCI Equity Indexes beginning in February.
MSCI announced last week that after reassessing the amount of freely traded shares, it will reduce the weighing of four Adani Group firms in its indexes, including flagship firm Adani Enterprises.
The revised index weightings were supposed to take effect on March 1, but the proposed modifications to Adani Total Gas and Adani Transmission have been postponed until May.
MSCI said “potential replicability issues” were behind the decision. Its methodology calls for indexes to be replicated “in an actual portfolio in a cost-efficient manner.”
MSCI did not immediately react to a Reuters inquiry about why the modifications were reversed so soon after they were announced last week.
The weighting modifications for Adani Enterprises and ACC, a large Indian cement business bought by the Adani Group from Holcim last year, are still scheduled to take effect.
MSCI investigated the magnitude of firms’ free floats after determining that there was “significant ambiguity” regarding some Adani investors.
The MSCI decision followed a report on January 24 by US short seller Hindenburg Research accusing the Indian giant of unlawful use of offshore tax havens and stock manipulation. The organisation has denied any wrongdoing.