India's Position Strengthens In MSCI's Equity Index, Billions In Foreign Inflows Expected With Addition Of Seven Stocks

In a significant development, global index services provider MSCI has added seven new stocks into the MSCI India Index, including the Rail Vikas Nigam (RVNL), Oil India, Vodafone Idea, and Zydus Lifesciences.

The addition of these stocks is expected to bring net passive inflows of around $2.7 billion to $3 billion from foreign institutional investors into India.

Dixon Technologies India, Oracle Financial Services, and Prestige Estates Project are also among the other stocks added to the MSCI India Index, which forms part of the MSCI Global Standard Index.

These changes are set to take effect from the close of business on 30 August, according to MSCI.

Bandhan Bank has been excluded from the index.

Abhilash Pagaria from Nuvama Alternative & Quantitative Research said that after the adjustments in the Emerging Market (EM) Pack, India’s tentative weight is expected to stay close to 20 percent.

He projected that the country should see net FII passive inflows between $2.7 billion and $3 billion.

Pagaria further noted that, given the current momentum, India’s weight could potentially surpass 22 percent by the end of the year.

Following the MSCI's May 2024 rejig, which saw the inclusion of 13 domestic stocks such as Canara Bank, JSW Energy, Mankind Pharma, and NHPC in the Global Standard Index, India's weight in the index increased from 18.3 percent to nearly 19 percent.

MSCI India Domestic Small Cap Index has seen the addition of 25 stocks, including Gulf Oil Lubricant India, Bajaj Hindusthan Sugar, GMR Power & Urban Infra, Go Digit General Insurance, India Shelter Finance, Inox Green Energy Services, Inox Wind Energy, and Keystone Realtors.

MSCI has excluded eight stocks from the MSCI India Domestic Small Cap Index, including Cochin Shipyard, Indian Renewable Energy, Jaiprakash Associates, and Network 18 Media & Investments.

MSCI also clarified that from the August 2024 Index Review, it will implement changes to the index review, including modifications in the Number of Shares (NOS), Foreign Inclusion Factor (FIF), and Domestic Inclusion Factor (DIF) for Adani Group and associated securities, which were previously postponed.

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