India’s weight in MSCI equity index rises; ‘may fetch around $3-bn inflows’

Tentative weight goes up from around 19% to close to 20%

MSCI equity index, MSCI Inc stocks, Rail Vikas Nigam, foreign institutional investors, MSCI India Index, MSCI Global Standard Index, Dixon Technologies, Bandhan Bank, Indian express news

MSCI excluded eight stocks including Cochin Shipyard, Indian Renewable Energy, Jaiprakash Associates and Network 18 Media & Investments from MSCI India Domestic Small Cap Index. (File Photo)

MSCI Inc has added seven stocks including Rail Vikas Nigam (RVNL), Oil India, Vodafone Idea, and Zydus Lifesciences in MSCI India Index, resulting in net passive inflows of $2.7 billion to $3 billion from foreign institutional investors (FII) into the country.

The other stocks that have been included in MSCI India Index, which is part of MSCI Global Standard Index, are Dixon Technologies India, Oracle Financial Services and Prestige Estates Project. The latest changes will be effective from the close of August 30, MSCI said.

Bandhan Bank has been excluded from the index.

“With all the adjustments in the EM (Emerging Market) Pack, India’s tentative weight will remain close to 20 per cent. India should witness net FII passive inflow of $2.7 billion to $3 billion,” said Abhilash Pagaria Nuvama Alternative & Quantitative Research. Given the current pace and momentum, India’s weight could potentially cross 22 per cent by year-end, he said.

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After the May 2024 rejig, when MSCI Inc included 13 domestic stocks including Canara Bank, JSW Energy Mankind Pharma and NHPC in its Global Standard Index, the country’s weight in the index rose to close to 19 per cent from 18.3 per cent.

“For HDFC Bank, the long-awaited weight increase is finally happening. MSCI has made an exception by raising with lower adjustment factor, leading to an inflow of $1.8 billion, equivalent to 93 million shares, with an impact of about 4.5 days in August Rejig,” Pagaria said. The remaining float adjustment (second and final tranche) is expected to be done in the November 2024 rejig, provided the foreign room remains at least 20 per cent, which is unlikely to pose a problem, he said. HDFC Bank shares ended at Rs 1,603 apiece, down 3.46 per cent, on BSE.

In the MSCI India Domestic Small Cap Index, 25 stocks, including Gulf Oil Lubricant India, Bajaj Hindusthan Sugar, GMR Power & Urban Infra, Go Digit General Insurance, India Shelter Finance, Inox Green Energy Services, Inox Wind Energy and Keystone Realtors, have been added.

MSCI excluded eight stocks including Cochin Shipyard, Indian Renewable Energy, Jaiprakash Associates and Network 18 Media & Investments from MSCI India Domestic Small Cap Index.

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Separately, MSCI clarified that starting from the August 2024 Index Review, it will implement the index review changes, including changes in the Number of Shares (NOS), Foreign Inclusion Factor (FIF) and Domestic Inclusion Factor (DIF) of Adani Group and associated securities that have been previously postponed.

MSCI continues to monitor Adani Group and associated securities, including related to free float, and will issue further communication if appropriate