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MSCI announced its index changes for February on Tuesday. Inclusions in the MSCI Global Standard Index in the February review are NMDC, Punjab National Bank, BHEL, Union Bank of India, and GMR Airports. Stocks that have seen an increase in weightage include Zomato, DLF, MRF, Hindalco Industries, Interglobe Aviation, HDFC Asset Management, Lupin and One 97 Communications, among others.
The MSCI Smallcap Index has seen the inclusion of Cello World, Honasa Consumer, Jaiprakash Associates, DB Realty and IIFL Securities.
According to calculations by Nuvama Alternative & Quantitative Research, India could see close to $1.2 billion of passive inflows from FPIs as a result of the rejig.
Emerging markets index
The country holds about 17.9 per cent representation in the MSCI Emerging Markets Index, which may inch up to 18.2 per cent following the rejig.
India’s representation in the MSCI EM pack held steady at around 8 per cent from 2015 until October 2020. However, since November 2020, the country has more than doubled its representation. This is due to multiple factors such as India’s standardised foreign ownership limit, robust performance by Indian equities and the relative underperformance by other EM packs, especially China.
In 2023, India’s stock count in the MSCI Standard index rose to 131, with the inclusion of a net of 17 Indian stocks over the past four reviews. This marks an improvement from 2022, when only nine Indian stocks were included. The notable factors contributing to this increase include India’s substantial rally vis a vis other emerging markets and MSCI’s shift from semi-annual to quarterly rebalancing for stock inclusions and exclusions.
Consistent flows from domestic institutions and steady FPI participation may help India surpass a 20 per cent weightage in the MSCI EM Index by early 2024, according to Nuvama.
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