The story begins:

MUMBAI—A Morgan Stanley investment fund has reduced the valuation of its holding in Flipkart Internet Pvt. by 38%, as India’s leading e-commerce firm faces increased competition from U.S. rival Amazon.com Inc. and others.

In a U.S. regulatory filing this week, the Morgan Stanley Select Dimensions Investment Series fund said for the quarter ended Sept. 30, it held 1,969 Flipkart shares, which it valued at $102,644, or $52.13 a share.

For the preceding quarter, the fund—part of Morgan Stanley Investment Management, the company’s asset management division—reported the same number of shares in the startup, but valued them at $165,967, or $84.29 a share

In a statement, a Flipkart spokeswoman said the Morgan Stanley fund’s markdown was a “purely theoretical exercise” that is “not based on any real transactions.”

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