MSCI reclassifies India Index

Equity index provider MSCI has classified equities across a board spectrum of emerging and developed markets as part of its November semi-annual index review. But while a lot of changes were as expected, there was a bit of a rude shock as well, especially for mid-cap Indian companies, reports, CNBC-TV18's Nimesh Shah and Arvind Sukumar

Tech Mahindra, Nestle India and Yes Bank - three Indian counters that are now a part of the MSCI Global Standard Indices. This addition will be a big boost for these stocks, since MSCI's indices are the benchmark global investors follow avidly when taking investment decisions and these investors manage assets of over USD 7.5 trillion. Also read: Changes price performance based; see inflows into EMs: MSCI Brokerages say they expect these counters to see inflows of anywhere between USD 30 million and 85 million, when the changes become effective on the 27th of November. But with these 3 additions came four deletions. Bank of India, Canara Bank, Unitech and Wockhardt will no longer be a part of the index. However, this was along expected lines. What has raised eyebrows is that 36 Indian counters have been dropped from the MSCI Small Cap Index, which is the highest number when compared to any country in the Asia Pacific Region. Some of the more prominent ones include Financial Technologies, Gitanjali Gems, HCC, Punj Lloyd, Rolta, Sintex and Spicejet. But MSCI insists that one should not read too much into this. While 36 stocks have been deleted, the global index has seen additions like Torrent Power, Just Dial, and PVR. These stocks received a mixed reaction from investors mainly because some of them had seen a sharp rally over the last one week on anticipation of their inclusion into the index.