Web Special: Changes to MSCI India Index constituents

The India weightage in Morgan Stanley Capital International (MSCI) India Index, popularly know as MSCI India Index has declined marginally by 9 basis points largely due to change in constituents in India Index. The MSCI India Index will now have 58 stocks from current 59.

The Morgan Stanley has announced changes to MSCI India index constituents under its May 2009 Semi Annual Index Review (SAIR). The MSCI India Index has added three new stocks, namely Idea Cellular, Bajaj Auto and United Phosphorus have combined weightage of 1.30 per cent. Essar Oil, Unitech, Tata Communications and Indian Hotels, having weightage of 1.60 per cent, will be out of the MSCI India Index from May 29.
 

Top 10 weightage in MSCI Index
Company	New Wtg

% Chg

Reliance17.34%0.11% Infosys10.29%0.07% ICICI Bank6.11%0.04% HDFC5.46%0.03% HDFC Bank4.64%-0.24% ONGC3.18%0.02% ITC2.94%0.02% BHEL2.79%0.02% Hind Unilever2.76%0.02% Larsen & Toubro2.75%0.02% Source: MSCI-Barra, J P Morgan

The MSCI India Index will be effective from as of close on May 29, 2009. Based on these changes, India country weight in the MSCI EM Index will reduce marginally from 6.47 per cent to 6.36 per cent. The 12 constituents in MSCI India index have lost weightage by 1.48 per cent while 30 have seen increase of 1.79 per cent. The incoming constituents will have weightage of 1.30 per cent while the four outgoing had weightage of 1.60 per cent.

J P Morgan regional strategy team estimates the size of MSCI Emerging Market based passive funds to be $33.9 billion. This would imply an outflow of $35 million on account of adjustment for India country weight reduction. J P Morgan analyst indicate that while the impact of passive fund readjustments will be limited, adjustment from active funds managers could have a meaningful impact especially on stock prices of new additions and deletions as well as companies with large changes in index weight.