MSCI, the global provider of benchmark indices, has announced an increase in India's weightage in the MSCI Emerging Market (MSCI EM) index. In its quarterly index review report, MSCI increased India's weightage in its EM index to 6.40% from 6.33%.
Within the index, the weightage of the Housing Development Finance Corporation (HDFC) was increased 125 basis points to 7.46%, while that of Infrastructure finance company (IDFC) was raised by two basis points to 1.16%.
On the other hand, some blue-chip companies that saw a drop in their weights were Hindustan Unilever (-13 basis points), Reliance Industries and Infosys (-10 basis points each), and HDFC Bank (-7 basis points).All changes are to be implemented as of the close of August 31.
“There will be no additions to and no deletions from the MSCI India index. There will be two updates in the Foreign Inclusion Factors (FIF) and 31 updates in the number of shares resulting from the August 2012 Quarterly Index Review,” stated MSCI in a note.
In a dull close to the market on Thursday, shares of housing finance major HDFC closed at R709.90, up 1% on the BSE. State-run IDFC ended near its one-month high at R142.20, up 4%.
“We do not expect any major appreciation in the stock price of HDFC. Due to technical changes, MSCI had earlier decreased the weightage and that has now been increased again. It is just a technical thing and does not have any impact on the fundamentals,” said an analyst at Motilal Oswal. Even after a reduction in the MSCI EM index, shares of RIL zoomed to a five-month high after Goldman Sachs said the company has the potential to become a $100-billion company by FY17. On BSE, RIL closed at R815.05, up 2%.
Four companies that have been dropped from the India index among the MSCI Global Small Cap indices are Bombay Rayon Fashions, Mindtree, Nava Bharat Ventures and Time Technoplast.