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India’s Adani shares fall after MSCI review of free-float status | business and economy news

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The US-based stock index provider determined that certain securities of Adani Group should no longer be designated as free float.

Global stock index compiler MSCI says it is reviewing equity positions in India's Adani Group, ending a brief rally for the beleaguered conglomerate as it fends off allegations of market manipulation.

In a statement published India time on Thursday, United States-based MSCI said the review was triggered by investor concerns regarding the "eligibility and free float determination of specific securities" linked to the Adani group.

"MSCI has determined that there is sufficient uncertainty in the characteristics of certain investors that they should no longer be designated as free float in accordance with our methodology," the firm said.

"This determination has triggered a free float review of the securities of the Adani Group."

MSCI - an acronym for Morgan Stanley Capital International - defines a free float as the proportion of shares that can be purchased publicly on stock exchanges by international investors.

Indian billionaire Gautam Adani's business empire lost nearly $120 billion after American short-selling investment group Hindenburg Research accused him of artificially inflating share prices in a report on January 24.

The report and its aftermath forced Adani Enterprises to abandon its $2.5 billion stock offering.

The group repaid some of them this week after pledging to repay the initial $1.1 billion in loans in a move to reassure investors.

But nine out of 10 listed entities linked to the firm were back in the red in early Mumbai trade after MSCI's announcement, with flagship Adani Enterprises plunging 10 per cent after recently falling to a multi-year low .

Adani Transmission, Adani Total Gas and Adani Power were down 5 per cent each, while Adani Ports and Special Economic Zone were down around 9 per cent each.

In response to MSCI's statement, Hindenburg founder Nathan Anderson wrote on Twitter: "We view this as validation of our findings."

Hindenburg has accused Adani of artificially inflating the share prices of its entities by injecting money into the shares through offshore tax havens.

Adani has repeatedly denied the allegations and accused the US investment firm of a "maliciously mischievous" attack.

The tycoon is known to be a close ally of Indian Prime Minister Narendra Modi, which opposition legislators have accused of Adani's rapid rise, which until last month gave him the title of Asia's richest man.

The stock market crash has since seen him fall from 3rd to 17th on Forbes' list of real-time billionaires.

Adani has defended his group's operations, insisting last week that "the fundamentals of our company are very strong".

The Securities and Exchange Board of India regulator is probing the market move, a person with direct knowledge of the matter told Reuters news agency this week.

Ratings firm Moody's has warned that the drop in share price could hit the group's ability to raise capital, while India's central bank is examining the risk appetite of lenders.

JP Morgan on Tuesday said Adani group companies are eligible to be included in the bank's influential bond index.

The same day, Adani Companies said in a filing that the group was considering an independent assessment of issues surrounding legal compliance, related party transactions and internal controls following the Hindenburg report.

More than 6 years of experience in Digital Journalism. I write on political and tech topics. Follow for regular updates of country, foreign and tech news.

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