Eternal Ltd is expected to witness an outflow of around $600 million from passive funds following the reduction of its weight in MSCI’s latest quarterly review, according to a report by IIFL Alternative.
The downgrade in index weighting stems from the company’s decision earlier this year to cap foreign ownership at 49.5 percent. Asian Paints is also projected to experience outflows exceeding $100 million due to a similar weight reduction.
In the same review, MSCI announced the inclusion of Hitachi Energy India, Swiggy, Vishal Mega Mart, and Waaree Energies in its standard indexes, while Sona BLW Precision Forgings and Thermax will be removed. These changes will take effect at the close of trading on August 26.
Vishal Mega Mart is estimated to attract inflows of $258 million, Hitachi Energy India $230 million, Swiggy $289 million, and Waaree Energies $233 million. Conversely, Sona BLW Precision Forgings and Thermax are projected to see passive fund outflows of $163 million and $121 million, respectively.
According to a report by Nuvama, the net impact of MSCI’s index adjustments is expected to result in an overall outflow of $250 million to $270 million from India.
In the MSCI Smallcap Index, 15 stocks were added while six were removed. The inclusions comprise Belrise Industries, Brainbees Solutions, Capri Global Capital, CSB Bank, India Glycols, Inventurus Knowledge Solutions, Lloyds Enterprises, Lumax Auto Technologies, Nexus Select Trust, Privi Specialty Chemicals, Sona BLW Precision Forgings, Thermax, Transrail Lighting, Yatharth Hospitals, and Zinka Logistics Solutions.
IIFL estimates Sona BLW to see the highest inflows among these at $40 million, followed by Thermax at $30 million and Nexus Select Trust at $25 million, with other additions expected to attract between $4 million and $14 million.
The six exclusions from the Smallcap Index are Bharat Dynamics, Easy Trip Planners, Hikal, Jain Irrigation Systems, MSTC, and Protean e-Gov Technologies. Bharat Dynamics is projected to see the largest outflow among these at $31 million, while the remaining deletions may experience outflows in the range of $2 million to $5 million, according to IIFL Alternative.
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