MSCI EM Index and MSCI Global Standard Index Rejig: The market run in recent years that has propelled the S&P BSE Sensex and the Nifty50 to all-time highs has seen India's weight in the MSCI EM Index rise from roughly 8% in 2020 to an exact 20% today, according to Nuvama analysts. Given the present rate of growth and momentum, they believe India will surpass 22 percent by the end of the year.
"At Nuvama Alternative Research, we've time and again written about this, and following the upcoming August and November rebalances, we wouldn't be surprised to see India's weight approach 22 percent," according to Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research.
MSCI Global Standard Index: Inclusions and Exclusions
Rail Vikas Nigam Limited (RVNL), Dixon Technologies, Vodafone Idea, Oil India, Zydus Lifesciences, Prestige Estate Project, and Oracle Financial Services Software (OFSS) are the seven stocks that will be added to the MSCI Global Standard Index in the coming weeks, according to an MSCI announcement.
Analysts at Nuvama predict a $281 million inflow into Dixon Technologies, followed by Vodafone Idea at $278 million, Oil India at $238 million, Zydus Lifesciences at $230 million, RVNL at $219 million, Prestige Estates Project at $181 million, and OFSS at $170 million. The modification to the aforementioned MSCI Global Standard Index is expected on August 30, 2024. Bandhan Bank, on the other hand, is expected to witness a $125 million outflow once the company is removed from the MSCI Global Standard Index, according to the Nuvama paper.
MSCI Smallcap Index Rejig Candidates
However, Go Digit General Insurance, Max Estates, Bharat Bijlee, Shriram Pistons, Aurionpro Solutions, Shakti Pumps, Protean eGov, Paras Defence, and Jyoti CNC Automation are among the high conviction stocks that Nuvama feels will make it into the MSCI Smallcap Index rejig later this month.
HDFC Bank's weight in the MSCI Indexes
Meanwhile, HDFC Bank's long-awaited weight rise is finally taking effect. MSCI made an exception by increasing with a lower adjustment factor, resulting in an inflow of $1.8 billion, equivalent to 93 million shares, and an effect of about 4.5 days in the August rejig.
"The remaining float adjustment (second and last tranche) is expected (formally disclosed) to be completed in the November 2024 rejig, assuming the foreign room maintains at least 20%, which we feel should not be an issue. With all of the EM Pack modifications, India's preliminary weight will stay around 20%. "India should receive a net FII passive inflow of $2.7 billion to $3 billion," Pagaria stated.
