MSCI semi annual review adds five stocks to India index, removes four others; check what’s changed

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May 13, 2020 2:15 PM

One of the world’s biggest index compilers in the world, MSCI (Morgan Stanley Capital International) has announced five Indian-listed stocks that will be added to its MSCI India index, which constituted the MSCI Global Standard Indexes.

One hundred thirty-seven securities will be added to the MSCI ACWI Index and one hundred eight-one securities will be deleted from the index.

One of the world’s biggest index compilers in the world, MSCI (Morgan Stanley Capital International) has announced five Indian-listed stocks that will be added to its MSCI India index, which constituted the MSCI Global Standard Indexes. The additions are a part of its semi-annual index review. Biocon Ltd, Indraprastha Gas, Jubilant Foodworks, Tata Consumer, and Torrent Pharmaceuticals are the new entrants that will be included in the index at the end of this month. Along with the five additions, MSCI has also announced the deletion of four other Indian-listed firms that were already a part of the index, these include — Ashok Leyland, M&M Financial Services, Shriram Transport Finance, and Tata Power.

One hundred thirty-seven securities will be added to the MSCI ACWI Index and one hundred eighty-one securities will be deleted from the index, while there will be sixty-two additions to and ninety-three deletions from the MSCI World Index, MSCI said. Apart from the 9 stocks that were added or deleted from the Global Standard Index, MSCI will also add 18 stocks to the global small-cap index. Ashok Leyland, Bharat Heavy Electricals, Cummins India, Future Retail, and Tata Power are among these 18 stocks. MSCI will also delete 54 names from the list. 

Although largely, most of the additions to MSCI India were already predicted by top brokerage firms, there have been minor modifications. “We were not expecting Jubilant Foodworks to enter but the index but it has. Among the five additions Indraprastha Gas will likely have half weightage factor because it has less headroom, so we are expecting only $48 million buying here,” Nitesh Jain, VP – Institutional Derivatives Research, Motilal Oswal, told Financial Express Online. “We expected four names to move out, which were M&M Financial Services, Tata Power, and Bharat Forge. Unfortunately, Bharat Forge has not been excluded but instead, Shriram Transport has been deleted,” he added.

The MSCI indexes are followed by global fund houses to plan global equity portfolios. MSCI was also expected to increase India’s weightage in its global indices post the change in foreign investability announced by the NSDL and CDSL earlier this year. However, MSCI recently said that it will come out with an announcement in that context before June 30. FTSE and MSCI both are expected to give out some comments about India’s weightage by June 30.

“Buy flows are worth about $537 million and sell flows are worth $180 million, but what happens is there’s no money coming in. The difference is distributed among all other names so the net buy-sell remains zero,” Nitesh Jain said. While Biocon’s share price has gone down by 1.7% today, Torrent Pharma is down 2.4%, and IGL slipped 0.30%. On the other hand, Tata Consumer Products was trading flat and Jubilant Foodworks share price jumped 3.5%.

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