MSCI Rejig: MSCI Rejig: India may see $2.5 billion FII inflows

Mumbai: Global index services provider MSCI has included 13 Indian stocks in its Global Standard Index and removed three. That takes the total count of domestic stocks on the MSCI indices to 146, up from 136. The change is scheduled for May 31 and India could potentially witness an inflow of $2.5 billion from global passive funds, the highest among any emerging market in the current index rejig.

Global passive funds, such as exchange-traded funds, structure their portfolios based on these indices. Any change in composition prompts these funds to adjust their allocations. The newly included stocks are JSW Energy, Canara Bank, Indus Towers, PB Fintech, Sundaram Finance, and NHPC. Berger Paints has been dropped, while Indraprastha Gas and Paytm’s parent, One 97 Communications, have been downgraded to the small-cap index.

“India has once again achieved a major milestone in this rejig, as its representation in the MSCI EM Index is set to increase from the current 18.3% to closer to 19%,” said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research. “The adjustments slated for May 31 could witness a net inflow of upwards of $ 2.5 billion in FII passive flows.”


Weight raised for some stocks
Online insurance aggregator PB Fintech, which operates Policybazaar, is likely to see an influx of ₹2,400 crore ($149 million) with the MSCI inclusion. Sundaram Finance and NHPC could attract an inflow of about ₹2,000 crore from passive funds. Similarly, Phoenix Mills, Indus Towers and Bosch’s local unit are anticipated to receive between ₹1,500 crore and ₹2,000 crore.

Berger Paints, Indraprastha Gas and Paytm are expected to see an outflow of over ₹2,500 crore.

Also, some stocks such as AU Small Finance, Vedanta, Macrotech and Zomato have seen an increase in weight and, as a result, could see an inflow of ₹300 crore to ₹700 crore.

Housing Urban Development Corp., Vendant Fashion, RR Kabel, Gillette India and Force Motors are among 29 stocks that have been added to the small-cap index. About 15 stocks, including Alok Industries, Brightcom, Polyplex and Greaves Cotton have been removed from the index.

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