It’s status quo now for MSCI on India revamp

Our Bureau Chennai | Updated on July 01, 2020 Published on July 01, 2020

Morgan Stanley digital signage   -  Bloomberg

MSCI defers revamp of Global Standard indices

Global index major Morgan Stanley has decided to defer its change in Global Standard Index that was supposed to have taken place on June 30.

MSCI will defer until further notice potential increases in Foreign Ownership Limits (FOL) resulting from the recently implemented relaxation of the foreign portfolio investor (FPI) limit of Indian companies to the sectoral limit, it said in a statement.

The sectoral limits published by National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) are new and more time is required for market participants to test the disclosure mechanism, the index major said.

“MSCI is awaiting further clarifications on the timeliness, quality and standardisation of the data provided by NSDL and CDSL before making related changes to the MSCI Indexes,” the statement added.

Analysts were expecting weightage of Kotak Mahindra Bank, Larsen & Toubro, Nestle, Britannia and Divi’s Laboratories to go up in the MSCI rejig.

MSCI will, therefore, defer potential increases in the current FOLs and resulting changes to the foreign inclusion factors (FIF) of Indian securities as part of the quarterly index reviews (QIR)/semi-annual index reviews (SAIR) and corporate events.

However, MSCI will continue to monitor securities included on the CDSL and NSDL lists for which the red flag or breach limit has been reached and apply the relevant treatment as per the global investable market indexes (GIMI), it added.

It may be recalled that in April too, MSCI had deferred the decision on increasing India’s weighting in its global standard index.

Analysts were expecting at least this time around the global index provider would hike the country’s weighting by assigning higher FIF. However, for now the wait has to continue.

Published on July 01, 2020
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