MSCI may add Bank of Baroda, Adani Power, other stocks to India index in next review; $485 mn inflows likely

As much as $485 million inflows could be coming towards five domestic stocks if they end up getting added to the MSCI (Morgan Stanley Capital International) indices in the upcoming Semi-Annual Index Review.

Changes made in this review by MSCI will be effective from June. (Image: PIXABAY)

As much as $485 million inflows could be coming towards five domestic stocks if they end up getting added to the MSCI (Morgan Stanley Capital International) indices in the upcoming Semi-Annual Index Review, analysts at Emkay Global said. In a recent report, Emkay Global said that Bank of Baroda, Tata Elxsi, NMDC, Adani Power, and AU Small Finance Bank could end up getting included in the MSCI India Standard Index. MSCI, the global index provider, rebalances its indices semi-annually and quarterly. The semi-annual index review is expected to be announced in the first half of May this year. Changes made in this review by MSCI will be effective from June.

“We have assessed probable changes to the MSCI India Standard Index assuming the price cut-off date of April 18, 2022,” Emkay Global said. “This is an advance estimate of expected inclusions as the actual cut-off date for consideration would be any of the last 10 days of April 2022. We will release another update close to the announcement date,” they added.

-Among the high probability inclusion list are Bank of Baroda, Tata Elxsi, and NMDC. Analysts expect Bank of Baroda to be included in the MSCI India Standard Index. This addition will result in a 0.16% weightage to the lender in the index and inflows worth $58 million. Bank of Baroda’s share price is up 34% so far this year to now trade at Rs 112 per share.
– Tata Elxsi is also expected to be added to the index with a weightage of 0.37% and inflows worth $131 million. Shares of the company are up more than 36% in 2022, sitting at Rs 8,060 per share. 
– NMDC is also expected to the added to the MSCI India Standard Index with a weightage of 0.17%. This may result in inflows worth $60 million. The stock is up nearly 25% this year, trading at Rs 168 per share.

On the other hand, Adani Power is a low probability inclusion idea to the MSCI indices. If the stock is included, it may result in 0.37% weightage and $132 million in inflows. The stock has more than doubled this year and now trades at Rs 257 per share. “Adani Power ltd. lies on the border line of ‘extreme price increase’ threshold while fulfilling other criteria by a good margin, thus making it our low probability inclusion,” analysts said. Additionally, AU Small Finance Bank may also get added to the indices, but analysts see a low possibility of the same. If included the stock could have a 0.29% weightage and result in $104 million in inflows.

Analysts at Emkay Global do not expect any exclusion from the standard indices in this review.

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