MSCI India Indices Rebalancing: Key Inclusions, Exclusions, and Weight Changes Announced

Index services provider MSCI announced changes to its India Standard and Smallcap indices on November 6.

Four companies have been newly included in the MSCI India Standard Index: Fortis Healthcare Limited, One97 Communications Limited (Paytm), Siemens Energy India, and GE Vernova T&D. Concurrently, Tata Elxsi Limited and Container Corporation of India Limited have been excluded from the Standard Index and moved to the Smallcap category.

Besides these inclusions and exclusions, MSCI will adjust the weightage of eight stocks by increasing it and decreasing the weightage of six others. These adjustments will lead to a slight increase in India's overall weightage in the MSCI Standard Index, rising to 15.6% from 15.5%, with the total number of companies represented growing to 163 from 161.

Stocks slated for an increased weightage include Asian Paints Limited, Apollo Hospitals Enterprise Limited, Lupin Limited, SRF Limited, Suzlon Energy Limited, Yes Bank Limited, Alkem Laboratories Limited, and Jubilant FoodWorks Limited. Conversely, stocks whose weightage will decline are Samvardhana Motherson International Limited, Dr. Reddy's Laboratories Limited, REC Limited, Zydus Lifesciences Limited, Bharat Forge Limited, and Colgate-Palmolive (India) Limited.

Impact: According to Nuvama Alternative & Quantitative Research, the inclusions to the Standard Index are expected to witness significant inflows, ranging from $252 million to $436 million. For instance, Fortis Healthcare may see inflows up to $436 million, and One97 Communications (Paytm) up to $424 million. The exclusions from the Standard Index are expected to lead to outflows, with Tata Elxsi potentially seeing outflows of up to $162 million and Container Corporation of India Limited up to $146 million.

Stocks with increased weightage, such as Asian Paints, are also anticipated to receive substantial inflows, estimated at $95 million. On the other hand, companies like Samvardhana Motherson and Dr. Reddy's Laboratories, facing reduced weightage, might experience outflows of up to $50 million.

Difficult Terms: * MSCI India Standard Index: An index that represents the performance of Indian equities and is used by global investors to benchmark their investments in India. Changes to this index can lead to passive fund flows as index-tracking funds rebalance their portfolios. * Weightage: The proportion of a company's stock in an index, based on its market capitalization. Changes in weightage mean that index funds will buy or sell more of that stock. * Inflows/Outflows: Inflows refer to money coming into a stock or market segment as investors buy it. Outflows refer to money leaving a stock or market segment as investors sell it. These are often driven by index rebalancing.