CIL to make fast entry into global indices

Coal India, whose shares are going to be listed on Indian bourses on Thursday, is set to make a “fast entry” into global indices, even before it is included into the country’s benchmark indices — Sensex and Nifty.

FTSE, which manages prestigious indices like FTSE 100, will include the world’s largest coal producer’s stock into two of its global indices with effect from November 5. The index compiler will add Coal India’s stock into FTSE All-World Index and FTSE All-Emerging Index on a fast entry basis. According to the data provided by FTSE, there are 2,775 constituents in the FTSE All-World Index and 778 constituents in the FTSE All-Emerging index.

MSCI, another leading index provider, will also consider the inclusion of Coal India’s stock into its indices during its semi-annual index review on November 10. The changes suggested in this review will be effective from December 1.

Coal India fulfils all the criterion of MSCI like full market capitalisation, free-float market capitalisation and the proportion of shares available for purchase in the stock market by international investors considered for inclusion into its indices.

To start with, MSCI is likely to include Coal India’s stock into MSCI India from December 1 and into other indices like MSCI Asia-ex Japan after some time. MSCI did not comment on the possibility of Coal India’s inclusion into its indices.

“There is a possibility of follow-up buying into Coal India stock from exchange-traded funds tracking these indices,” an official of a foreign fund, who wished not to be named, said.

FTSE All-World index is tracked by Vanguard Total World Stock exchange traded fund (ETF), which has assets under management of about $736 million. Seven ETFs and an exchange-traded note (ETN) that track MSCI India, including Lyxor ETF MSCI India and iPath MSCI India, manage assets worth $4.3 billion, as per Bloomberg data.

Coal India’s initial public offer (IPO), the biggest ever in India, had seen overwhelming response from overseas investors. The issue was subscribed 24.7 times in the category reserved for institutional investors, in which foreigners accounted for over 70 per cent of the demand.