Index provider MSCI has added four stocks to its India index, with one of these being included in its MSCI Emerging Markets Index. All four stocks outperformed the broader benchmark indices on Thursday.
MSCI has added Apollo Hospitals, GlaxoSmithKline Consumer, Wockhardt and Oil India to the MSCI India Index. There were no deletions, according to a press release from the company. Oil India has also been added to the MSCI Emerging Markets Index, one of the index’s largest additions. “The three largest additions to the MSCI Emerging Markets Index measured by full company market capitalisation are Shin Corp PCL (Thailand), Suzano Papel E Celulose (Brazil), and Oil India (India),” said the MSCI release.
Taher Badshah, co-head of equities at Motilal Oswal Asset Management Co, said the change in benchmark constituents would have an effect on passively managed funds. “These funds would have to re-balance their portfolios in line with the new index. Some amount of the run-up seen today is in anticipation of this happening. One could see some impact on the day the change becomes effective,” he said.
Apollo Hospitals was up 8.51 per cent to close at Rs 1,048. GlaxoSmithKline Consumer Healthcare rose 7.66 per cent to Rs 4,783.45. Wockhardt gained 1.06 per cent to Rs 1,848.1. Oil India rose 3.1 per cent to Rs 598.6.
The changes were announced as part of MSCI’s Semi Annual Index Review for the MSCI Equity Indices – including the MSCI Global Standard, MSCI Global Small Cap and MSCI Micro Cap Indices, as well as the MSCI Global Value and Growth Indices. Other indices involved in the review include the MSCI Frontier Markets and MSCI Frontier Markets Small Cap Indices, said the company.
The indices are used as a benchmark against which investors measure their performance. They are also used by passive fund managers to construct portfolios which generate returns in the same proportion as their benchmark.
MSCI has also made changes to its small cap indices. It has added nine stocks to the small cap version of the MSCI India index, and removed 35.
The additions include Godrej Properties, Credit Analysis Research, Videocon Industries and JK Cement. The stocks which have been deleted include Core Education and Technologies, Corporation Bank, Educomp Solutions and ICRA.
Vikas Khemani, president, head institutional equities at Edelweiss Securities, too, has suggested stocks tend to move with the change in weightage. It can also happen after the date of the rebalancing depending on the situation on the ground at the time, he said.
All changes are to be effective May 31, 2013.
STOCKS REACT AS MSCI ALTERS INDEX MATH
- MSCI has tweaked indices tracking the emerging markets, India and Indian small-cap companies
- MSCI India index sees four additions
- MSCI Emerging Markets Index sees one
- Small-cap version adds nine, 35 removed
- Passive investors whose portfolios mirror the index have to rebalance their portfolios
- Changes effective May 31