MSCI rejig to trigger $350 mn ETF inflows after adjustments, say analysts

Three Adani group among six stocks added to the Global Standard Index

Global index provider MSCI has included six new domestic stocks to the Global Standard Index, a move that will result in inflows of $350 million from exchange traded funds (ETFs).

Adani Total Gas, Adani Enterprises and Adani Transmission are among the six stocks added to the index, which is tracked by schemes with assets under management of $50 billion.

SBI Cards, Cholamandalam Investment and Bharat Electronics are the other three stocks. Meanwhile, Zee Entertainment has been removed from the index and is added to the MSCI India Domestic Small Cap index.

Abhilash Pagaria, analyst at Edelweiss Alternative Research said the new additions will see inflows of about $ 1billion and the net flows into India will be about $350 million after factoring in the adjustments in other index components.

The rejig is part of the semi-annual review of MSCI indices and the changes will take effect from May 27.

“There will be weight reductions in few names which will result in outflow. Some of these stocks include Reliance Ind (outflow of $90 million), Infosys ($83 million), TCS ($90 million), Ultra Tech Cement ($83 million) and Vedanta ($74 million),” he said in a note.

Stocks that will see an increase in weightage include Wipro (inflows of $70 million), Power Grid ($40 million), Dabur ($30 million) and Coal India ($30 million).

MSCI has added about 34 stocks and removed five from the India Domestic Small Cap index.

IRCTC, Oracle Financial Services and Max Health are the key stocks added to the index.

“The inflows in top three small cap names could be $15-18 million each while in others somewhere around $7-8 million,” said Pagaria.