MSCI shuffle: REC, HDFC AMC, PFC & others to receive upto $214mn inflows

Index aggregator MSCI changes to the MSCI global standard index announced on August 23 are expected to occur on Thursday. According to estimates, the reshuffling may result in $152-214 million inflows for eight Indian stocks, namely IDFC First Bank, REC, Power Finance Corporation (PFC), Ashok Leyland and HDFC AMC, according to a report by Business Today.

According to predictions made by Abhilash Pagaria of Nuvama Institutional Equities, as reported by BT, IDFC First Bank could potentially receive $214 million in inflows. REC is projected to experience $207 million inflows, followed closely by PFC at $206 million, Supreme Industries ($200 million), Ashok Leyland ($197 million), and Cummins India ($171 million).

Astral ($170 million) and HDFC AMC ($152 million) are also anticipated to enjoy inflows, while ACC, the sole MSCI exclusion, might see outflows amounting to $96 million.
 

The global research support house of MSCI added HDFC AMC and removed ACC in the MSCI India index. Moreover, a total of 41 securities, including Aether Industries, Avalon Technologies, Glenmark Life Sciences, Kalyan Jewellers, Star Health and Allied Insurance, and Sula Vineyard, were also added to the MSCI India Domestic SmallCap index during the announcement made earlier this month, as earlier reported by Business Standard.

Nuvama also highlighted that REC and Supreme Industries were unexpected entries; however, they are strong contenders for the November 23 review. Pagaria stated, "It's worth noting that the aforementioned stocks were selected via the NOC route as this time India got six NOC slots which is one of the highest seen in my experience."

Several other stocks are also expected to receive inflows amounting to $128 million due to reduced weightages. These include Reliance Industries, TCS, Axis Bank, Hindustan Unilever, Bharti Airtel, Bajaj Finance, and Kotak Mahindra Bank. Additionally, PI Industries is poised to experience inflows of $15 million due to an increased weightage, as observed by Nuvama.

Meanwhile, MSCI has communicated its intent to maintain the current float and continue to monitor the situation without implementing any changes. This aligns with our previous expectations. MSCI has retained the existing methodology, leading to no alteration in HDFC Bank's FIF factor. India's weightage is projected to shift from approximately 14.5 per cent to 14.7 per cent.