Global index provider MSCI has changed its weightage for four Adani Group stocks in its various widely tracked indices.


What is MSCI?

  • MSCI, or Morgan Stanley Capital International, is owned by the multinational investment management and financial services company Morgan Stanley.
  • It is an investment research firm that provides stock indexes, portfolio risk and performance analytics, and governance tools to institutional investors and hedge funds.
  • It is a leading provider of critical decision support tools, including stock indexes, and services for the global investment community.
  • MSCI indices facilitate the construction and monitoring of portfolios in a cohesive and complete manner, avoiding benchmark misfit. It has over 160,000 indices in its portfolio.


What are MSCI Indices?

  • MSCI has indexes for countries, regions, emerging markets, developed markets, small cap, all cap and even Islamic indexes.
  • It selects stocks for its equity indexes that are easily traded and have high liquidity, with companies having high free float getting more weightage.
  • It prefers stocks that have active investor participation, and are without owner restrictions.


What is MSCI India Index?

  • The MSCI India Index is designed to measure the performance of the large and mid-cap segments of the Indian market.
  • With 113 constituents, the index covers approximately 85% of the Indian equity universe.
  • The index is reviewed quarterly.


What is Free Float?

  • Free float refers to the proportion of the total outstanding shares of a publicly listed company that is readily available for trading in the market.
  • Generally speaking, shares held by promoters and large institutional investors are normally not freely traded in the market.
  • The free float of a company can sometimes give investors a rough idea about the likely liquidity of the company’s shares in the public market.
  • It should be noted that the weightage given to a company’s stock in certain indices is based on the company’s market capitalisation.
  • A company’s market capitalisation is calculated based on the free float of the company and also the market price of the company’s stock.
  • So, a drop in the number of freely floating shares of a company can cause a drop in its market capitalisation and reduce its weightage in indices.