FTSE Rejig — Hyundai India, Swiggy, NTPC Green May Draw Solid Inflows On Likely Inclusion

The upcoming rejig in indices of London-based FTSE is likely to bring inflows of $360 million in notable Indian stocks like Hyundai Motor India Ltd. and Swiggy Ltd. The revision announcement is scheduled on May 23, with the flows expected to commence from June 20.

According to IIFL Alternate Desk, several stocks are anticipated to see significant inflows as a result of these adjustments.

Hyundai Motor India is projected to receive $131 million inflows, representing 7.1 times its average daily volume (ADV). The bluechip stock has risen 5% since its debut in October last year.

Vishal Mega Mart is estimated to see inflows of $75 million (3.7x ADV), followed by Swiggy with $60 million (2.5x ADV), and NTPC Green with $50 million (3.5x ADV).

Waaree Energies Ltd., which has fallen nearly 5% since listing in November last year, is expected to receive inflows of $44 million, which is 0.4 times its ADV.

Index rejigs are key events for the market as they help investors to gauge the direction in which the funds are moving.

When an index is reorganised, exchange-traded funds (ETFs) and mutual funds that track that index perform a rebalancing exercise. This is crucial for them to re-align their portfolios with the new composition of the index.

Essentially, the index's constituents are adjusted to maintain the intended asset allocation proportions or to keep the overall risk level consistent with the index's predefined methodology.

The rebalancing activity usually begins days before the date the changes are implemented.