Morgan Stanley Cap Ups India Weightage

Morgan Stanley Capital International has increased India's weightage in its Emerging Markets Free (EMF) index from the current 6.6 per cent to 7.6 per cent.

The EMF index is used by most international fund managers managing emerging market funds as a benchmark index. The respective country weightages help fund managers to make the necessary allocations as per the EMF index.

This is the first revision of the India's weightage in this benchmark index for over two years. The last time it was revised was in March 1996.

India's weightage in the EMF Asia Index has also risen sharply. From the current weightage of 23.5 per cent, India's weightage has been revised upwards to 24.6 per cent. This means that the MSCI India index now has 69 stocks with a market capitalisation of $47,587 million. Before the revision, there was a total of 67 stocks with a market cap of $39,955 million.

 

There has been reshuffling of the individual stock weightages too. While the top five weighted scrips remain the same, the individual weightages have changed.

Hindustan Lever, the highest weighted scrip in the index, has had its weightage dropped from 18.8 per cent to 15.78 per cent.

ITC weightage has dropped from 8.21 to 6.89 percent; MTNL's weightage has fallen from 7.15 to six per cent; Reliance Industries' weightage has declined from 6.71 to 5.63 per cent; and the State Bank of India's weightage has dropped from 5.84 to 4.91 per cent. Wipro, the new entrant in the index becomes the fifth most weighted scrip with a weight of 4.09 per cent, replacing Bajaj Auto whose weightage has been reduced to 3.56 from 4.23 per cent. The other main beneficiary of the revisions in the EMF index and the EMF Asia index is South Korea.

South Korea's weightage in the EMF index has risen to 4.8 per cent from 2.5 per cent. In the EMF Asian index, South Korea weightage has more than doubled from 6.8 per cent to 15.8 per cent.

Speaking to Business Standard, Michael Lindermeyer of MSCI, London said: "If only the tradeable universe is taken into account, the MSCI India Index represented only 46 per cent of the market and it will be 54 per cent after the structural changes are made. This is closer in line with our target of 60 per cent inclusion of a market."

He added: "In India, the market is characterised by a large number of small companies with poor to non-existent liquidity. Only about 500 companies out of the almost 6000 listed trade on any regular basis and these cover 99 per cent of the trading value of the market and 90 per cent of the market capitalisation. This is the universe we have used for the present structural changes."