(Bloomberg) -- Adani Group stocks fell, ending a two-day rally, after MSCI Inc. said it was reviewing the amount of shares linked to the group that were freely tradable in public markets.

Any decision by the index provider to cut its assessment of the number of Adani shares considered freely tradable or remove the stocks from its indexes will likely trigger more selling. Separately, French energy giant TotalEnergies SE put a multi-billion dollar plan to produce green hydrogen with the Adani group on hold pending audits in a sign of a wider fallout from Hindenburg Research’s critical report last month. 

Nine of the group’s 10 stocks ended lower on Thursday, with flagship Adani Enterprises Ltd. plunging as much as 20% before paring its loss to 11%. That follows a 35% jump over the previous two sessions. The group’s market value has tumbled after US-based Hindenburg published its report on Jan. 24, with losses at one point reaching $117 billion.

Norway’s $1.4 trillion sovereign wealth fund said it has sold its remaining stake in the Adani Group companies after the recent slump in value. The Oslo-based fund had been reducing exposure to the Indian conglomerate even before Hindenburg’s report emerged.

“Any newsflow, be it positive or negative, can result into sharp stock movement, which we are witnessing,” said Vikas Gupta, chief investment strategist at OmniScience Capital in Mumbai. “With the kind of troubles the group is facing, there will be more scrutiny because ultimately funds or index companies are also responsible to their investors and will have to conduct their own assessment of the situation.”

MSCI’s review directs market attention back to a key allegation from Hindenburg that offshore shell companies and funds tied to the Adani Group comprise many of the largest “public,” or non-insider, holders of Adani shares. The index provider said it will implement and announce any resultant changes affecting calculations of the so-called free float and market capitalization of group stocks when releasing its February index review scheduled later Thursday.

“This is unmitigated bad news for the Adani Group companies and a lot of the gains made over the last couple of days could be wiped out today,” Brian Freitas, an analyst at Smartkarma, wrote in a note. “There will be big passive selling.”

Meanwhile, a number of banks were said to have balked at refinancing some of the conglomerate’s debt following the rout sparked by Hindenburg’s allegations. That has prompted a plan by the group to prepay a $500 million bridge loan due next month, Bloomberg reported.

READ: Adani Total Gas 3Q Net Income 1.5B Rupees Vs. 1.28B Rupees Y/y

Separately, people with knowledge of the matter said the embattled group is offering shipments of coal at a discount, a sign it may be seeking to sell cargoes quickly as its liquidity position comes under increased scrutiny.

Sustainalytics on Wednesday downgraded the ESG scores of several Adani Group companies following Hindenburg’s criticisms of the conglomerate’s corporate governance. The scores for “business ethics controversy” for Adani Total Gas Ltd. and Adani Transmission Ltd. were both downgraded to “moderate” from “low,” the ratings agency said.

Adani Wilmar Ltd. was the sole gainer among 10 group stocks on Thursday, rising 5%. That’s even as state government officials inspected the firm’s warehouse and office in northern Himachal Pradesh to find out if there are any tax violations.

The turmoil triggered by Hindenburg’s wide-ranging allegations of purported corporate malpractice — which Adani has repeatedly denied — eased over the past two days as the billionaire stepped up measures to reassure investors and banks by repaying loans and pledging to reduce debt ratios. The slump in the group’s dollar debt has attracted buyers such as Oaktree Capital Management and Davidson Kempner Capital Management. 

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Investors are likely to stay jittery over a renewed slide in shares due to concerns over the group’s access to funding. The fallout from the Adani tumult has extended beyond financial markets. India’s main opposition party has been drawing attention to the ties between Prime Minister Narendra Modi and Gautam Adani and the tycoon’s meteoric growth that mirrors the leader’s rise to the top elected office.

When asked about the exposure to Adani stocks, Victoria Mio, head of equity research for Asia Pacific at Fidelity International, said in general she stays away from companies with hefty valuations. “We are not hurt by recent events because these type of companies are not on our radar screen because of high valuations.”

--With assistance from Ishika Mookerjee.

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