Global index aggregator MSCI will be reviewing its indices tomorrow, May 15, which could potentially bring $2 billion in passive inflows for domestic stocks.
As of May 13, India's weight in the MSCI Emerging Market Index stood closer to 18 per cent, a significant jump from 8 per cent in early 2020. By the second half of 2024, Nuvama Alternative & Quantitative Research anticipates India's weight to cross the 20-per cent threshold in the emerging market index (EM) index.
For the MSCI rejig tomorrow, Nuvama has reaffirmed its May 2024 conviction names for Standard and Small-cap Index. It sees four stocks namely, Indus Towers ($224 million), PB Fintech Ltd ($223 million), Phoenix Mills ($213 million) and Sundaram Finance ($207 million) to be included in MSCI Global Standard index, which may result in over $200 million in passive inflows for each of the stock.
Solar Industries India Ltd ($170 million), NHPC Ltd ($170 million), Bosch Ltd ($164 million), Jindal Stainless ($162 million), Torrent Power ($160 million) and Mankind Pharma Ltd ($158 million) are some other likely MSCI entrants that may see over $150 million in passive inflows, as per Nuvama.
Three socks namely One 97 Communications Ltd (Paytm), Berger Paints and Indraprastha Gas Ltd (IGL) may see exclusions from standard index, which may result in up to $111 million outflows.
Waaree Renewable, Vedant Fashions Ltd, Va Tech Wabag Ltd, Doms Industries, Inox India, Time Technoplast and Sanghvi Movers could be added to the MSCI Smallcap Index.
"The May review will entail another action-packed rejig as we anticipate close to USD 2 billion inflow into India. The pre-emptive price action in most of the names are already factored in," Nuvama said.
It said India's ascent in the EM pack will continue to astound skeptics and reward believers in the India story. As of now, India's stock count in the MSCI Standard Index/EM Index is 136, and Nuvama anticipates it to reach closer to 150 by the forthcoming May review. The official announcement is likely around 3:30 am, May 15.