India’s Growing Weight in MSCI Global Standard Index: Impact on Passive Flows and Market Impact

2023-11-15 06:05:00

India’s weighting in the MSCI Global Standard (Emerging Markets) Index will rise from 15.9% to nearly 16.3%, an all-time high, after the index provider’s November revision.

This represents “a significant increase over the past three years, nearly doubling its weight,” Nuvama Alternative & Quantitative Research said in a note.

Foreign investors use MSCI indices as an indicator to allocate their passive flows.

MSCI added nine Indian stocks to the index in its November revision on Tuesday, with the changes taking effect from the market close on November 30. After the rebalancing, the number of Indian stocks will increase to 131.

Indian automaker Tata Motors, cable maker Polycab India, real estate firm Macrotech Developers, IndusInd Bank and Paytm parent One 97 Communications are among the nine stocks that were added. No Indian titles have been removed to accommodate the new additions. According to Nuvama calculations, India is expected to receive passive flows of nearly $1.5 billion as a result of this reshuffle.

IndusInd Bank, Suzlon Energy, Persistent Systems and APL Apollo Tubes will each receive maximum inflows of $355 million, $289 million, $255 million and $228 million after inclusion, the domestic brokerage said.

MSCI has added One 97 Communications and Polycab India to its India Domestic Index, an index focused on the large and mid-cap segments of the domestic market.

Power Finance Corp, REC, IDFC First Bank, Supreme Industries and Max Healthcare Institute were included in the domestic index.

The MSCI Small Cap Index, which accounts for around 14% of the market capitalization of Indian stocks in the MSCI indices, also saw the inclusion of 41 stocks, while 13 stocks were excluded.

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