Bad news continues to stalk the Adani group. On Friday, global credit rating agency Moody’s Investor Services downgraded the ratings outlook of four Adani group companies even as Morgan Stanley Capital International (MSCI) cut the free float weights of four other firms on its global indices.

The twin developments were the latest hammer blows to the Gautam Adani-owned ports-to-energy conglomerate whose reputation has been battered ever since US short-seller Hindenburg Research accused the group of accounting fraud and stock price manipulation in a report published on January 24.

Moody’s downgraded its ratings outlook to negative from stable for Adani Green Energy; the Energy Restricted Group, which represents some of its other units; and two subsidiaries of Adani Transmission.

“These rating actions follow the significant and rapid decline in the market equity values of the Adani Group companies following the recent release of a report from a short-seller highlighting governance concerns in the group,” Moody’s said.

MSCI cut the free float weight of Adani Enterprises by 10 basis points to 0.15 per cent. It cut the weight of Adani Total Gas by 11 basis points to 0.14 per cent and that of Adani Transmission by 15 basis points to 0.10 per cent.

Cement maker ACC saw its weight trimmed by 5 basis points to 0.35 per cent. In percentage terms, the cuts amounted to 60 per cent in the case of Adani Transmission, 40 per cent for Adani Enterprises, 44 per cent for Adani Total Gas and 12.5 per cent for ACC.

However, the stocks did not wobble as sharply as had been feared. The changes in the free float weights will come into effect from March 1, giving the markets time to adjust to the changes.

Group flagship Adani Enterprises saw its stock tumble by almost 10 per cent to a day’s low of Rs 1,734.60 in early trades on the BSE but quickly recovered thereafter. It closed the day at Rs 1,847.35, down Rs 79.95 or 4.15 per cent. Adani Transmission and Adani Total Gas closed 5 per cent lower while ACC dipped by 1.85 per cent.

In another index action, the S&P BSE IPO index dropped Adani Wilmar, the conglomerate’s consumer goods company, as part of its monthly review, according to a statement from S&P and the Bombay Stock Exchange. It did not explain the rationale behind the move.

Analysts said the revision in the weights of Adani group stocks in the global indices would prompt passive funds (whose investment pattern broadly mirrors the indices) to sell the stock.

A note from Nuvama said that it would lead to a cumulative outflow of over $420 million.

This is lower than the $1.5 billion outflow estimated by the research house earlier.

Market regulator Sebi swung into action after dithering for over a fortnight and ordered an investigation into the Adani group’s links with two Mauritius-based funds — Great International Tusker Fund and Ayushmat Ltd.

The two firms had been designated as anchor investors in the Adani Enterprises’ recently aborted Rs 20,000 crore follow-on public offer (FPO).

Under Sebi rules, an entity linked to a founder or the founder group cannot participate as an anchor investor to a share flotation.

The Adanis have hired Wachtell, a top US legal firm, to defend the Adani group against the Hindenburg accusations.

The Indian group had threatened to file a suit against Hindenburg Research when the short-seller first published its report, prompting Nathan Anderson — the founder of Hindenburg — to dare the Adanis to pursue legal redress in the US.

Hindenburg has said that it would use the opportunity to call for sensitive documents relating to the Adani group under the US legal process.

The Adani group still needs to pay back loans worth over $800 million raised from European banks against which the promoters have stumped up their shares as collateral.

Earlier this week, the Adanis pre-paid $1.1 billion of loans to Barclays, Citigroup and Deutsche Bank and freed the shares after the banks had made margin calls in the wake of the sharp fall in the value of Adani group shares.

Reports said Gautam Adani had faced a margin call of more than $500 million on a $1.1-billion loan that was backed by shares and this had forced him to pre-pay the entire amount.

It is now learnt that the group plans to prepay a $500-million bridge loan which is due next month to Barclays Plc, Standard Chartered and Deutsche Bank.

The group has said that it will release all share pledges shortly