MSCI Index inclusion likely to spur big churn for domestic stocks

IndusInd, Suzlon, Paytm among nine companies seen getting added to the index

IndusInd Bank, Suzlon, and Paytm will remain under focus in Wednesday’s trade, as the stocks are pegged to get added to the MSCI global standard index. These stocks, along with six others, are seen attracting cumulative inflows of nearly $2 billion from passive funds tracking MSCI indices. The global index provider is expected to announce the changes to its indices before the market opens on Wednesday.

Persistent Systems, APL Apollo, Polycab, Macrotech Developers, Tata Motors DVR, and Tata Communication are the other six stocks that will be added to the MSCI index, shows an analysis done by Nuvama Alternative & Quantitative Research. The estimated buying in the nine stocks ranges between $160 million (Rs 1,300 crore) and $290 million (Rs 2,400 crore).  

Typically, a stock tends to gain after its inclusion in any widely-tracked index. However, most of these nine stocks are already up in anticipation.

For instance, shares of IndusInd Bank are up 4 per cent in one month and 23 per cent in six months. The Benchmark Nifty50 is down 1.5 per cent in the past one month and has gained six per cent in the past six months. Similarly, shares of Suzlon have gained 37 per cent in the past one month and have zoomed over 4.5 times in six months. However, the rise solely can’t be attributed to index inclusion.

While the MSCI announcement will take place today, the changes will become effective on November 30.

Close to two domestic dozen stocks are seen getting added to the MSCI Smallcap Index. Some of these include Gokaldas Exports, SJVN, Hindustan Construction, and PTC India. About a dozen stocks could get excluded from the index and these include Vodafone Idea, Dalmia Bharat, and Indian Bank.

Mankind may make it to FTSE index
 

FTSE Russell is expected to announce changes to the FTSE All World and FTSE All Cap indices on Friday. A note by IIFL Alternative Research says Mankind Pharma could get added to the index. The move could result in passive inflows of $30 million in the condom manufacturer.  The adjustment date for the FTSE indices will be December 15.