MSCI EM Index Nov Rejig- India’s weight to increase with new inclusions

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On 6 November 2024, MSCI announced its latest rebalancing of the MSCI Global Standard Index. Post this rearrangement, the index will have five new stocks from India which will evidently boost India’s weightage in the global index and especially in the MSCI Emerging Market Index. So which are these stocks that are now included in the MSCI EM index? How this will affect the Indian markets? Let’s explore. 

New Inclusions and Rebalancing in the MSCI Index

The five new stocks that would be included in the index are – 

  1. Voltas 
  2. BSE
  3. Alkem Laboratories 
  4. Kalyan Jewelers
  5. Oberoi Realty  

These stocks will be added to the index on 25 November 2024 as announced by the organisation. 

The total count of stocks from India in this global index will rise to 156 with these five new inclusions. While many expected Adani Energy to be one of the stocks to be included this time, however, that stock didn’t make the cut and MSCI stated the prime reason for not including it is its low confidence regarding the free float. 

Apart from new inclusions, HDFC Bank’s weightage in the MSCI index will be raised for the second tranche. This is the weightage increase that was announced in August, but segregated into two tranches.

Tata Power, Samvardhana Motherson, PB Infotech, JSW Energy, Jindal Steel, and Power APL Apollo Tubes are the other stocks that will also witness a rise in their weightage in the MSCI index. 

On the other hand, Adani Green Energy, Adani Power, and GMR Airports Infra will see their weightage decrease, as adjusted for free float. Heavyweight stocks such as ICICI Bank, Reliance Industries, TCS, Infosys, and Bharti Airtel will also see a decrease in their weightage. 

Apart from the MSCI Global Standard Index, 13 stocks will be added to the MSCI India Smallcap Index which includes names like Eureka Forbes, Aadhaar Housing Finance, DCM Shriram, Signature Global, and others. 

This latest rebalancing of the MSCI index will increase India’s weightage in the MSCI Emerging Market Index to 19.8% from the current 19.3%. This can be the highest increase in weight of any emerging markets index in this November msci rejig

How MSCI November Rejig will affect the Indian Market?

With this new rebalancing of the MSCI Index coming into effect on 25 November, the markets in India are expected to see an inflow of around $2.5 billion via FII passive investment flows. 

The five new inclusions can bring in individually the following fund flow (anticipated)- 

  1. Voltas – $300 million
  2. BSE – $260 million 
  3. Alkem Laboratories – $201 million  
  4. Kalyan Jewelers – $241 million 
  5. Oberoi Realty  – $215

The increase in the weightage of HDFC Bank can also bring in a passive flow of $1.88 billion for the banking sector investors. The stocks that would be included in the MSCI India Smallcap Index can bring in $3 to $7 million individually. 

Wrapping up 

With this rebalancing of the MSCI Emerging Market Index, India can attract more investments from outside as more Indian stocks will be available for trade and investment to global investors. This would also help in boosting domestic investments and overall help the markets grow. 

Source: MoneyControl

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