MSCI rejigs index: India's weightage cut triggers passive outflow in market

India has the fifth-biggest weight in the index at 11.1 per cent, after South Korea at 14.6 per cent and Taiwan at 13 per cent

The latest rejig in MSCI indices could be the reason behind the latest turbulence in domestic markets. 

Earlier this month, the global index provider had announced changes to the MSCI Emerging Market (EM) index, in which it increased the weightage of China-A shares (those listed in mainland China), and added Saudi Arabia and Argentina. 

As part of this rebalancing, India’s weightage in the index was reduced by around 30 basis points (bps). The changes became effective from Wednesday. 

Analysts said the reduction in weightage triggered gross outflows between $600 million (Rs 4,200 crore) and $700 million (Rs 4,900 crore) from the Indian market. 

On