1 day ago
MSCI Rebalancing Sends Adani Stocks Into Closing-Auction Volatility
Stock prices moved sharply when a major index was changed.
This change made investors buy and sell many shares at the same time.
The new Closing Auction Session handled nearly Rs 39,718 crore in trades.
Adani Group shares were among the biggest fallers during the final part of trading.
Adani Enterprises briefly fell to Rs 2,921 per share.
Experts said the sudden movements may have been caused by large index-related orders.
Some brokerages still believe Adani companies could grow and kept Buy ratings.
The trading session was considered an important early test of the new auction system.
NSE recorded Rs 39,718 crore in Closing Auction Session turnover during the MSCI rebalancing.
Adani Enterprises and Adani Energy Solutions fell sharply, with some Adani stocks dropping 7-10% intraday.
Adani Enterprises touched Rs 2,921, its biggest one-day decline since January, according to the article.
MSCI added Laurus Labs, Lenskart, Adani Energy Solutions and Groww to its global standard index.
Motilal Oswal and Jefferies retained Buy views on Adani companies despite the market volatility.
- Who
- The National Stock Exchange of India Limited, MSCI, Adani Group companies, and brokerage firms including Motilal Oswal and Jefferies.
- What
- An MSCI index rebalancing produced heavy Closing Auction Session trading and sharp declines in several Adani stocks.
- Where
- The Indian capital markets, primarily on the National Stock Exchange of India Limited.
- When
- The first major rebalancing after the Closing Auction Session began; the MSCI changes take effect on September 1, and the article also references August 31 closing prices.
- Why
- Index-related buying and selling flows created unusually high volumes and volatility during the closing auction.
Market stress concerns
Brokerage growth outlook
Cause of the sharp declines
Market stress concerns
Traders and market observers attributed the large swings in Adani stocks to sudden, stock-specific flows connected with the MSCI rebalancing and the new closing auction.
Brokerage growth outlook
The brokerage reports cited in the article focused on Adani companies' expansion, market position, infrastructure opportunities and expected earnings growth rather than treating the declines as a deterioration in long-term prospects.
Near-term interpretation
Market stress concerns
The falls and unusually high auction volumes were viewed as volatility and possible teething troubles during the first major stress test of the Closing Auction Session.
Brokerage growth outlook
Motilal Oswal and Jefferies maintained Buy ratings, indicating confidence in the longer-term outlook for Adani Enterprises and Adani Ports despite the day's price movements.
Key facts
- Closing Auction turnover
- Rs 39,718 crore, approximately $4.2 billion, on the rebalancing day.
- NSE CAS market share
- 99.9% on the first index rebalancing day after the system began.
- First-month CAS turnover
- Rs 63,000 crore cumulatively, with an NSE market share of 98.2%.
- Adani Enterprises intraday low
- Rs 2,921 per share.
- MSCI additions
- Laurus Labs, Lenskart, Adani Energy Solutions and Groww.
- MSCI deletions
- Balkrishna Industries, SBI Cards and Astral.
- Brokerage views
- Motilal Oswal rated Adani Enterprises Buy with a Rs 3,880 target; Jefferies rated Adani Ports Buy with a Rs 1,705.15 target.
Quotes
Motilal Oswal
Brokerage house that initiated coverage of Adani Enterprises with a Buy rating
“Adani Enterprise’s expansion across verticals, rising contribution from incubated businesses, and robust demand outlook provide strong visibility on earnings growth and cash flow generation over the near and long-term.”
financialexpress.com
Sources
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