The MSCI rebalancing, announced earlier this month, goes live today, bringing significant changes to its indices. Indian equities are projected to attract inflows of approximately $1.9 billion, with HDFC Bank and five other stocks accounting for close to $2 billion.
The MSCI Smallcap Index will see 13 additions and seven deletions, reflecting evolving market dynamics. These updates are expected to boost Indian stocks’ global visibility and attract more passive foreign investments, further strengthening the country’s position in emerging markets.
HDFC Bank to receive $1.9 billion in inflows
Banking heavyweight HDFC Bank is set to be a major beneficiary of the MSCI index revisions. Its weightage in the MSCI Emerging Markets (EM) Index will increase, projected to attract $1.9 billion in FII inflows.
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This adjustment marks the second phase of a planned weightage increase initially announced in the August 2024 MSCI review, highlighting HDFC Bank’s growing role in driving the MSCI index realignment.
India’s strengthened position in MSCI Emerging Markets Index
India’s stock count in the MSCI Standard/EM Index will increase to 156, with five new additions and no exclusions. This move raises India’s weight in the MSCI EM Index from 19.3% to 19.8%, representing the largest basis-point gain among emerging market countries in this revision.
Key additions to the MSCI Global Standard/EM Index include:
– Voltas: Expected inflow of $312 million
– BSE: Projected inflow of $259 million
– Kalyan Jewellers: Estimated inflow of $241 million
– Oberoi Realty: Forecasted inflow of $215 million
– Alkem Laboratories: Predicted inflow of $204 million
Smallcap Index adjustments
Thirteen stocks, including Eureka Forbes and Signature Global, will be added to the MSCI Smallcap Index, increasing its total count to 525.
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These additions are expected to generate approximately $71 million in inflows, further supporting Indian equities across market segments.
Adani Group faces exclusions and reductions
In a conservative move, MSCI excluded Adani Energy from the index, citing low confidence in its free float. Additionally, MSCI reduced the free-float weightage for Adani Green Energy and Adani Power,
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