MSCI Rejig Comes Into Effect Today: To Bring $2.5 Billion Of Passive Inflows, Says Nuvama

The MSCI reshuffle, effective from Nov. 25, 2024, is set to bring India an estimated $2.5 billion in passive foreign inflows, as per Nuvama Alternative & Quantitative Research. This move marks a significant boost to India's position in the MSCI Emerging Markets Index, raising its weight from 19.3% to 19.8%, while China's weight declines slightly from 27% to 26.8%.

Notable upgrades in the reshuffle include Kalyan Jewellers India Ltd., Voltas Ltd., and Bombay Stock Exchange, which have been moved from small-cap to mid-cap status. Additionally, Oberoi Realty Ltd. and Alkem Laboratories Ltd. have been newly added to the index.

Kalyan Jewellers stock price was up 4.30% in early trade on Monday at Rs 736.80. BSE Ltd. and Voltas were similarly up 4.51% and 3.74%, respectively at market open. Oberoi Realty surged 5.40% to Rs 2,046.75, whereas Alkem Laboratories Ltd. stock price also rose 2.42% to Rs 5,718.50.

No Indian stocks were removed, resulting in a total of 156 Indian stocks in the MSCI Emerging Markets Index. The MSCI Small-Cap Index saw the addition of 13 Indian stocks, expanding the market's presence to 525 small-cap stocks.

This increased representation not only boosts India's weight in the index but also attracts substantial foreign capital through passive inflows, as anticipated by Nuvama.

HDFC Bank Ltd., India's most heavily weighted stock in the MSCI Emerging Markets Index at 7.08%, is expected to receive a significant portion of the inflows, with an estimated $1.9 billion in additional investments.

Other stocks with increased weight include Tata Power Co., Interglobe Aviation Ltd., and JSW Energy Ltd., further solidifying India's growing market presence.

Nuvama remains bullish on India's outlook, noting that domestic mutual funds, high-net-worth individuals, and retail investors are likely to play an active role in the inflow momentum. India's rising share in the MSCI Emerging Markets Index continues to narrow the gap with China, suggesting that further additions could follow.

The research firm highlighted that India's potential for additional upgrades remains significant, signaling further growth in its global market standing.