MSCI November Rejig: Voltas, BSE, Alkem Labs among five inclusions, HDFC Bank's weightage set to go up

The adjustments for MSCI's rejig will take place on November 25.

Names like BSE, Voltas, Alkem Laboratories, Kalyan Jewellers and Oberoi Realty will now be a part of MSCI Global Standard Index following its latest rejig on November 7. The adjustments for the latest rejig are slated for November 25, and India is expected to witness a net inflow of around $2.5 billion in FII passive flows through the rebalance, according to Nuvama Alternative & Quantitative Research.

With five inclusions and zero exclusions, India's net stock count in the MSCI Standard index post the rejig will be 156. Out of the five new inclusions, Voltas is projected to attract the highest inflow, likely above $300 million, while BSE shares could see inflows nearing $260 million, as per Nuvama . Others including Kalyan Jewellers, Oberoi Realty and Alkem Labs are likely to garners passive inflows to the tune of $241 million, $215 million and $201 million, respectively, Nuvama estimated.

Meanwhile, expectations were also running high over Adani Energy's inclusion to the index, however, the stock failed to make the cut. The MSCI also provided a detailed explanation for
not considering the stock, citing low confidence about the its free float.

Apart from this, banking giant, HDFC Bank will see the second tranche of its weightage increase on the index, resulting in further inflows. MSCI had previously announced an increase in HDFC Bank's weightage in its previous August rejig, opting to implement the adjustment in two stages rather than a one-time boost.

As per calculations by Nuvama, the weight increase may trigger passive inflows of upto $1.88 billion for the banking bellwether.

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In addition to HDFC Bank, stocks like Tata Power, JSW Energy, Samvardhana Motherson, Jindal Steel and Power, PB Fintech, and APL Apollo Tubes will also see an increase in their weightage on the MSCI Global Standard Index. In a contrast, adjusted for free float, Adani Green Energy, GMR Airports Infra, and Adani Power will see reductions in their weightage.

Similarly, heavyweight  stocks like Reliance Industries, ICICI Bank, Infosys, TCS, and Bharti Airtel will also witness a reduction in weightage.

Meanwhile, 13 more stocks will also be added to the MSCI India Smallcap Index. These include Eureka Forbes, Signature Global, Aadhaar Housing Finance, Indegene, PC Jewellers, and DCM Shriram, with expected inflows ranging between $3 million and $7 million, according to Nuvama Alternative. In total, these inclusions could draw total inflows of around $71 million.

The latest rejig is also slated to take India's weightage in the MSCI Emerging Market Index increase from the current 19.3 percent to closer to 19.8 percent . This increase in weight, in terms of basis points, is the highest among any EM index in this rejig.

Following the rebalancing, Abhilash Pagaria, Head, Nuvama Alternative and Quantitative Research expressed his bullishness over India, especially with the active participation from mutual funds and HNI/retailers in the Indian equity markets.

He anticipates many more inclusions from India making its way in the EM index. At the current moment, the highest representation in the MSCI EM index stand with China at a weightage of 27 percent, holding 598 members in the index, compared to India's 19.3 percent weight with 151 stocks. "There is enormous potential for far more additions to happen for India. Stay structurally bullish on India," Pagaria said.

Also Read | HDFC Bank's potential weightage hike in MSCI's Nov rejig could attract $1.88 bn inflows

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