Why Adani Total, Adani Transmission share hit lower circuit today — explained

Adani group stocks — Adani Total Gas and Adani Transmission shares hit 5 per cent lower circuit in early morning deals on Monday. According to stock market experts, this selling was expected after MSCI's decision to lower the free float in these two Adani group stocks. Experts said that FIIs and FPIs who invest in index fund follow MSCI and they are expected to bring down their exposure in these two Adani shares on the basis of MSCI's May index review. Hence, there can be sharp sell off taking place from FPIs and FIIs when the Indian stock market opens on Monday.

Why experts see FII, FPI selling?

Speaking on the impact of MSCI's action, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "FPIs and FPIs, who invest in index funds follow MSCI free float exposure. As MSCI has declared to lower free float in Adani Total Gas and Adani Transmission from 25 per cent to 14 per cent and 10 per cent respectively, these foreign investors were expected to offload their shareholding in these two Adani group shares and they have done exactly same during Monday deals."

However, Avinash Gorakshkar said that downside in Adani Total Gas shares and Adani Transmission share price is limited as these two Adani group shares have already received heavy beating after the Hindenburg Research report that raised concern over the debt positioning of Adani group companies including Adani Total Gas and Adani Transmission.

On what chart pattern suggests in regard to these Adani group shares, Anuj Gupta, Vice President — Research at IIFL Securities said, "Adani Total Gas shares price may go down towards ₹820 levels as it has breached its support of ₹880 apiece levels."

On pivot levels in regard to Adani Transmission shares, Anuj Gupta said, "Technical chart of this Adani group share is not looking positive. Adani Transmission shares are facing resistance at ₹1100 apiece levels. This Adani share has support placed at ₹900 levels and on breaching this support, Adani Transmission shares may go down towards ₹900 and ₹880 apiece levels. On higher side, if the stock breaks its hurdle, it may go up to ₹1200 and ₹1300 apiece levels."

MSCI announced on Friday that it will lower the free float of two Adani group companies — Adani Total Gas and Adani Transmission from 25 per cent to 14 per cent and 10 per cent respectively. Free float is defined as the proportion of outstanding shares considered available for purchase in public equity markets by international investors.

Other Adani group shares also fell during stock market's opening bell. Adani Enterprises share price tumbled 1.50 per cent, Adani Power share price dipped around 1.50 per cent, Adani Green Energy shares nosedived to the tune of 3.50 per cent and Adani Wilmar shares dipped around 0.70 per cent. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.