MSCI Index rejig likely to spur $1.5 billion inflows in domestic stocks

The latest rebalancing exercise by global index provider MSCI is likely to stoke inflows of $1.5 billion in the domestic stocks and boost the nation’s representation in the MSCI Emerging Market (EM) index, according to Nuvama Wealth Management. 

The global index provider announced the changes in the global standard index on Wednesday.

MSCI has included nine Indian companies in its global standard index. These are Indusind Bank, Suzlon Energy, Paytm (One97 communications), Macrotech Developers, Persistent Systems, APL Apollo Tubes, Polycab India, Tata Motors ‘A’, and Tata Communications. 

Shares of companies such as Suzlon, Paytm, and Tata Motors rallied following the MSCI announcement. The list of stocks was on the lines of those predicted by analysts in the run-up to the MSCI announcement.

There have been no exclusions from the India pool for the MSCI Global Standard Index. The adjustments will be effective from November 30.

“Post-rebalance, India's stock count will rise to 131, and our weights are set to move close to 16.3 per cent, compared to the current 15.9 per cent. India's representation in the EM index will reach an all-time high, marking a significant increase over the past three years, almost doubling its weight,” said Abhilash Pagaria, head, of alternative and quantitative research at Nuvama Wealth Management.

IndusInd Bank may see inflows of $355 million, while Suzlon Energy could see passive inflows to the tune of $289 million, followed by Persistent Systems at $255 million, the report said.

Paytm is likely to get inflows of $162 million with the inclusion, it said.

Companies including Zomato, Jio Financial Services, Hindustan Aeronautics, Vedanta, and three others have seen an upside in their weighting in the index.

However, the weight of Reliance Industries, ICICI Bank, HDFC Bank, TCS, and several others has declined owing to these new inclusions. These stocks could see marginally outflows.

The MSCI Smallcap Index will undergo notable changes with the inclusion of SJVN, Gokaldas Exports, and NLC India, and the exclusion of Vodafone Idea, ACC, Jindal Stainless, and Oil India, among others.