Maruti & Cadila among losers in MSCI India rejig

Tata Motors DVR gains on inclusion; DLF, Oil India drop

Changes made by global index provider MSCI to its indices hit shares of several Indian companies on Friday. Shares of Tata Motors  DVR gained a little over four per cent on inclusion in the MSCI India Index, while realty major DLF and state-owned Oil India fell around two per and five per cent, respectively.

MSCI had at its semi-annual review on Thursday announced changes to several of its indices, including the India domestic index and India domestic small-cap index.

Cadila Healthcare, Maruti Suzuki and Ashok Leyland are the other stocks added to the MSCI India Index. All three, however, ended with losses on Friday, given the overall weakness in the market. The benchmark BSE Sensex fell around one per cent to 25,610.53, lowest in nearly two months.

Inclusion or deletion from the MSCI indices impacts foreign investments into a stock, as passive or exchange traded funds have to adjust their portfolios accordingly. MSCI added 24 stocks and excluded 12 from its small-cap index. The additions included Ricoh India, which after gaining as much as four per cent, ended 1.2 per cent higher at Rs 889. Force Motors and Escorts fell after rising. Amtek Auto and Bank of India, removed from the index, fell more than the benchmark.

MSCI included China ADRs (American depository receipts) to its emerging market index. Among the prominent names added were Alibaba Group and Baidu.com. The MSCI Emerging Markets Index has 834 components from large-cap and mid-cap spaces, from 23 emerging markets.

The move to include China ADRs would reduce the weightage of existing stocks, including those from India. Data with the index maintainer showed India had 8.45 per cent weightage in the index as of October 30, with Infosys being the top-weighted stock for India.

The changes announced by MSCI will be effective from December 1 and market experts believe there could be an impact on stock prices. However, the move to include China ADRs is unlikely to have a significant impact on India, say analysts.

“While the impact analysis undertaken by the index provider earlier expected about a 30 basis points impact on Indian exposure, we believe the additions in the current rebalancing will offset the net flows into the country,” Kotak Institutional Equities had said, ahead of the rejig.