In addition to the inclusion of seven stocks into the Global Standard index, MSCI will also increase the weight of HDFC Bank in the index.
“MSCI’s August 2024 review changes for its standard and small-cap indices will be implemented on Friday, likely leading to $5.5 billion in net inflows,” said Sriram Velayudhan, head of alternative research at IIFL. “This includes adjustments to country weightings, with India expected to gain substantially post-rebalancing.”
Global passive funds, such as exchange-traded funds (ETFs), structure their portfolios based on these indices. As a result, any change in composition prompts these funds to adjust their allocations.
AgenciesWith these changes, India’s tentative weight in the emerging markets (EM) index is expected to rise to a record 20% from 19.4% now.HDFC Bank could see $1.5 billion in net inflow from passive funds alone. Dixon Technologies and Vodafone Idea are expected to get inflows above $250 million each. Other beneficiaries include Zydus Lifesciences, Bharti Airtel, and Oil India, which are expected to receive over $200 million each from the index revamp.MSCI has also updated its India small-cap index, adding 27 new stocks. Notable inclusions are Bandhan Bank, Go Digit General Insurance, Protean eGov Technologies, Paras Defence and Space, and Aditya Vision, among others. Dixon Technologies, Cochin Shipyard, IREDA, HUDCO, Network 18 Media and Investment, and Jaiprakash Associates have been excluded from the index.