Three prominent Indian stocks – Federal Bank Ltd, Multi Commodity Exchange of India Ltd (MCX), and National Aluminium Company Ltd (Nalco) – are collectively projected to receive approximately $1.2 billion in passive investment inflows. This significant boost comes as a result of their inclusion in the MSCI India Index, according to an analysis by Nuvama Alternative & Quantitative Research.
Major Inflows Driven by MSCI Index Inclusion
Federal Bank is expected to see the largest share of these inflows, with an estimated $491 million (representing 16.5 crore shares). MCX is anticipated to attract $373 million, while Nalco is set to gain $308 million from passive funds tracking the index.
Float Adjustments Benefit Key Stocks
Beyond new inclusions, several other companies are also slated for inflows due to adjustments in their free float calculations within the index. Adani Power Ltd is projected to receive $54 million, Bharat Petroleum Corporation Ltd (BPCL) $41 million, Nykaa $25 million, and Trent Ltd $5 million. These adjustments reflect changes in the availability of their shares for public trading.
Significant Outflows for Excluded Companies
Conversely, some major companies are facing substantial outflows as they are removed from the MSCI India Index. Hyundai Motor India is expected to see $281 million in outflows, Kalyan Jewellers India Ltd $137 million, and Rail Vikas Nigam Ltd (RVNL) $136 million. Additionally, ten other stocks, including Hindustan Unilever Ltd (HUL), Bajaj Finance, and Tata Consultancy Services (TCS), are projected to experience outflows ranging from $109 million to $204 million each due to weight reductions.
MSCI India Smallcap Index Sees Shifts
The MSCI India Smallcap Index is also undergoing a rebalancing. Companies such as Jubilant FoodWorks, IREDA, and PhysicsWalla are expected to see inflows of up to $25 million. However, some stocks, including Federal Bank, MCX, and Nalco, will be excluded from the small-cap index, leading to outflows of up to $73 million, as they transition to the larger MSCI India Index.
Overall Index Impact and Implementation
Despite these individual stock movements, India's overall weight in the MSCI Standard Index is expected to remain stable at 12.3 percent, a minor adjustment from 12.4 percent. The total number of represented companies in the index will stay at 165. The small-cap universe will see a reduction in stock count from 474 to 459 following the rejig. These changes, driven by MSCI's updated float calculation methodology, are scheduled to be implemented on May 29th.