MSCI Rejig: HDFC Bank likely to see $1.8 billion inflows, Vodafone Idea, RVNL and 6 other stocks likely to be added

In the upcoming MSCI India Standard Index rebalancing announcement scheduled for August 30 several stocks are expected to be included in the MSCI index. The potential additions to the index are Dixon Technologies, Vodafone Idea, Zydus Lifesciences, Oracle Financial Services (OFSS), Software, KPIT Technologies, Rail Vikas Nigam Limited (RVNL), Oil India, and Cochin Shipyard.

What are the expected inflows?

According to estimates by JM Financial, the anticipated MSCI India Standard Index rebalancing could lead to passive inflows totaling $1,239 million. Dixon Technologies is expected to attract the highest inflows of $192 million, followed by Rail Vikas Nigam Limited (RVNL) and Vodafone Idea, which might see inflows of $174 million and $165 million, respectively.

Additionally, other stocks such as Oil India, Zydus Lifesciences, Oracle Financial Services (OFSS), KPIT Technologies, and Cochin Shipyard are projected to experience inflows ranging from $144 million to $132 million. These inflows are likely to influence market dynamics and stock prices significantly.

What will be HDFC Bank’s weightage?

Additionally, HDFC Bank’s weight in the MSCI index is expected to rise to between 7.2% to 7.5% in the August 2024 review, up from the current 3.8%. This adjustment comes as foreign institutional holdings (FII) have decreased below 55%, which could lead to passive inflows of up to $4 billion, as estimated by Nuvama. 

The rebalancing of HDFC Bank’s weight will occur in two phases. The first adjustment will take place after the current review, with the second scheduled for after the November review, provided the foreign headroom remains at least 20%. 

Nuvama Alternative and Quantitative Research anticipates potential inflows of $1.8 billion for HDFC Bank over four-and-a-half days following the initial weightage increase.

New Inclusion Stock Performance in last 4 Months 

Over the past month, several stocks poised for inclusion in the MSCI India Standard Index have experienced varying price movements. Dixon Technologies, Rail Vikas Nigam Limited (RVNL), Vodafone Idea, and Cochin Shipyard have seen declines of 6.4%, 4.8%, 4.3%, and 14%, respectively.

In contrast, Oil India, Zydus Lifesciences, KPIT Technologies, and Oracle Financial Services (OFSS) have enjoyed price increases of 25%, 11%, 2%, and 1%, respectively. These price trends could influence investor sentiment and market reactions leading up to the index rebalancing announcement.