MSCI rebalancing takes effect today, driving $1 billion in passive flows; IndusInd Bank, Zomato, Hyundai Motor India stocks in focus

HDFC Bank, Reliance Industries, ICICI Bank, Infosys, and Bharti Airtel hold the highest weightage among Indian stocks in MSCI indexes.

Global index provider MSCI's rebalancing will come into effect following the close of the trading session on February 28. The rebalancing is likely to led passive inflows of around $1 billion, according to estimates.

The stocks that have seen addition, deletion, or significant weight changes during the the February 2025 review are likely to see volatility in trade during today's session.

Earlier this month, MSCI had announced that Hyundai Motor India Ltd. has been added to the MSCI Global Standard Indexes, making it the only Indian large-cap stock included in this review. The company, which went public in November last year, also saw the highest weight increase among Indian securities. Meanwhile, Adani Green Energy Ltd. has been removed from the index.

Among the top weight increases in the MSCI Standard Indexes, IndusInd Bank Ltd., Zomato Ltd., Varun Beverages Ltd., Mankind Pharma Ltd., Torrent Pharmaceuticals Ltd., Dixon Technologies (India) Ltd., PB Fintech Ltd., Adani Enterprises Ltd., and Voltas Ltd. joined Hyundai India in the top ten.

IndusInd Bank is set to gain a higher weight on the MSCI index in February’s rebalancing, driven by a reduction in foreign portfolio investor (FPI) holdings. FPIs reduced their stake from 55.53 percent in September 2024 to 46.63 percent in December 2024, enhancing foreign headroom at 25 percent.

The foreign headroom measures the percentage of shares still available for foreign investors to buy. If there the headroom crosses the 25 percent level, it means that there are more shares available for FIIs to buy.

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Conversely, the biggest weight decreases were seen in Adani Green Energy Ltd., Reliance Industries Ltd., HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Bharti Airtel Ltd., Tata Consultancy Services Ltd., Mahindra & Mahindra Ltd., Larsen & Toubro Ltd., and Axis Bank Ltd.

Following this reshuffle, HDFC Bank holds the highest weightage among Indian stocks in MSCI indexes, followed by Reliance Industries, ICICI Bank, Infosys, and Bharti Airtel.

In the small-cap segment, MSCI added 19 Indian stocks and removed an equal number. The top ten additions included Jyoti CNC Automation Ltd., Ola Electric Mobility Ltd., CarTrade Tech Ltd., Afcons Infrastructure Ltd., TBO Tek Ltd., Websol Energy Systems Ltd., Zaggle Prepaid Ocean Services Ltd., Shaily Engineering Ltd., Kovai Medical Center & Hospital Ltd., and Greaves Cotton Ltd.

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