Adani Group shares rebound after MSCI rebalancing wipes Rs 1.4 lakh crore
Adani Group stocks rebounded on Tuesday, with shares gaining up to 5% in intraday trading, a day after the conglomerate suffered its steepest single-day fall in market value in nearly 21 months.
On Monday, shares of Adani Group companies came under heavy selling pressure, wiping out nearly Rs 1.4 lakh crore, or about $15 billion, in market capitalisation, according to a Bloomberg report cited by Business Today. The correction came as heightened activity during the Closing Auction Session (CAS) led to price swings amid the latest MSCI index rebalancing.
Adani Enterprises Ltd plunged 9.8%, its steepest single-day fall since January, while Adani Energy Solutions dropped more than 10%. All nine listed Adani Group companies ended the session in the red, with three stocks recording losses of more than 6% each.
The sharp moves intensified toward the end of the trading session as passive funds adjusted their portfolios to reflect changes in MSCI indexes. The rebalancing triggered significant buying and selling flows in several Adani counters, resulting in unusually high volatility during the closing auction.
The scale of the market-value erosion highlights the impact that large index-related trades can have on individual stocks, even when the overall flows linked to the MSCI changes are substantial, the Bloomberg report said.
Tuesday's rebound
On Tuesday, Adani Green Energy emerged as the biggest gainer among Adani Group stocks in intraday trade, rising as much as 4.6%. Adani Ports followed with a gain of 3.2%, Adani Power climbed as much as 3.2%, Adani Enterprises gained up to 2.5%, and Adani Energy Solutions rose around 2% at its intraday peak.
Market expert Arun Kejriwal linked the rise to the MSCI rejig and the sharp price movement seen during the final half-hour of the previous session. "The MSCI rebalancing was known well in advance, prompting investors to take positions ahead of the change. However, the magnitude of the price movement in the last 30 minutes on the previous day caught some market participants off guard, leading to yesterday's correction," he said.
Kejriwal added that when the previous day's sharp move and Tuesday's gains are considered together, there is little significant change in prices on a net basis. He said the previous day's losses have largely been offset by Tuesday's gains, with the remaining movement reflecting the broader market trend.
Ravi Singh, chief research officer at Master Capital Services, noted that Adani Group stocks were trading higher after witnessing a sharp sell-off in the previous session amid the MSCI index rebalancing. He said the rebound appears driven by easing of MSCI-related selling pressure and bargain buying.
Passive inflows expected
According to Nuvama Alternative & Quantitative Research, passive funds were expected to deploy around $310 million into Adani Energy Solutions following its inclusion in the MSCI Standard Index. Adani Enterprises and Adani Ports were estimated to attract about $202 million and $77 million, respectively, in passive inflows.
Vipin Kumar projected $617 million in net passive inflow into targeted Adani Group companies and suggested traders accumulate select stocks.
Trader positioning suspected
Market analysts said the sharp decline in some Adani stocks, despite expectations of passive buying, could indicate that traders had positioned themselves ahead of the rebalancing and were subsequently forced to unwind those positions when the market moved against them.
"The sharp fall in the two Adani counters, despite passive buying, suggests that traders built positions that didn't meet expectations, possibly leading to forced liquidation," said Arun Kejriwal.
Legal context
The selloff resulted in the Adani Group's largest single-day fall in market value in nearly 21 months. The previous major fall came in November 2024, when US prosecutors charged Chairman Gautam Adani in connection with alleged bribery involving solar-energy contracts in India. In early August, Adani secured the dismissal of a US fraud probe, removing a significant legal overhang that had weighed on investor sentiment toward the group.