The November MSCI index rejig will take effect after market closes today, and it is set to trigger major shifts in select Indian stocks. One97 Communications (Paytm) and Fortis Healthcare are among those expected to receive strong inflows, while Tata Elxsi may face outflows as it exits the top index.
The new entrants: Four companies move into the MSCI Standard Index
MSCI’s semi-annual review has opened the door for four Indian companies to join its India Standard Index, which is part of the widely tracked Global Standard Index.
The companies entering the list are Fortis Healthcare, One97 Communications (Paytm), GE Vernova Transmission & Distribution India, and Siemens Energy India.
These inclusions generally attract buying from global passive funds that track MSCI indices.
As per estimates from Nuvama Alternative & Quantitative Research, Fortis Healthcare may see inflows of around $436 million, while Paytm could receive nearly $424 million. GE Vernova T&D and Siemens Energy India may also attract inflows in the range of $252-351 million.
The Exits: Tata Elxsi and CONCOR move out
Two well-known names Tata Elxsi and Container Corporation of India (CONCOR) have been removed from the MSCI India Standard Index and are being shifted to the Smallcap Index.
Tata Elxsi is expected to see passive outflows of nearly $162 million, while CONCOR may face around $146 million worth of selling.
Weight Changes: Winners and Losers within the Index
MSCI has also adjusted the weightage of several existing constituents. Eight companies will see a weight increase, potentially drawing more passive flows, while six companies will face reduced weightage, which may lead to outflows.
Among the gainers, Asian Paints, Alkem Laboratories, Apollo Hospitals, Lupin, Jubilant FoodWorks, SRF, Suzlon Energy, and Yes Bank are set to benefit.
Asian Paints alone may attract up to $95 million because of its higher weight.
On the other hand, stocks such as Samvardhana Motherson, Dr Reddy’s Laboratories, REC, v, Bharat Forge, and Colgate-Palmolive India may see a weight cut and corresponding selling.
Smallcap Index sees big additions and exits
Beyond the Standard Index, the India Smallcap Index has undergone its own set of changes.
New additions include ACC, Honeywell Automation India, Leela Palaces Hotels, Blue Jet Healthcare, and others. Meanwhile, companies like Restaurant Brands Asia, Rain Industries, Raymond, Balaji Amines, and Quess Corp have been removed.
Why the MSCI Rejig matters
MSCI indices are closely followed globally, and many large funds invest strictly based on these weightings.
So, when a stock gets added, buying flows in automatically; when it gets removed, selling follows.