India's weight in MSCI EM Index hits 20%; RVNL, Dixon to get huge inflow

MSCI EM Index, MSCI Global Standard Index rejig: The market rally in the last few years that took the S&P BSE Sensex and the Nifty50 to all-time high levels has seen India’s weight in the MSCI EM Index move up from around 8 per cent in 2020 to an exact 20 per cent today, analysts at Nuvama said in a recent note.

Given the current pace and momentum, they expect India to potentially cross the 22 per cent mark by this year-end.

“At Nuvama Alternative Research, we've time and again written about this, and following the upcoming August and November rebalances, we wouldn't be surprised to see India’s weight approach 22 per cent,” wrote Abhilash Pagaria, Head, Nuvama Alternative and Quantitative Research.

 

Inclusions and exclusions from MSCI Global Standard Index

Rail Vikas Nigam Limited (RVNL), Dixon Technologies, Vodafone Idea, Oil India, Zydus Lifesciences, Prestige Estate Project and Oracle Financial Services Software (OFSS) are the seven stocks that will be included in the MSCI Global Standard Index in the next few weeks, said a release from MSCI.

MSCI rejig

Analysts at Nuvama expect an inflow of $281 million in Dixon Technologies as a result, followed by Vodafone Idea at $278 million, Oil India at $238 million, Zydus Lifesciences at $230 million, RVNL at $219 million, Prestige Estates Project at $181 million and OFSS at $170 million. The adjustment in the above-mentioned MSCI Global Standard Index is likely on August 30, 2024.

Bandhan Bank, on the other hand, is likely to see an outflow of $125 million as the stock will be excluded from the MSCI Global Standard Index, the Nuvama note said.

MSCI Smallcap Index rejig candidates

That said, Go Digit General Insurance, Max Estates, Bharat Bijlee, Shriram Pistons, Aurionpro Solutions, Shakti Pumps, Protean eGov, Paras Defence and Jyoti CNC Automation are some of the high conviction stocks that Nuvama believes can make it to the MSCI Smallcap Index rejig later this month.

Probable candidates

 

HDFC Bank weight in MSCI indices

For HDFC Bank, the long-awaited weight increase, meanwhile, is finally happening. MSCI has made an exception by raising with lower adjustment factor, leading to an inflow of $1.8 billion, equivalent to 93 million shares, with an impact of about 4.5 days in the August rejig. 

“The remaining float adjustment (second and final tranche) is expected (officially been communicated) to be done in the November 2024 rejig, provided the foreign room remains at least 20 per cent, which we believe should not pose a problem. With all the adjustments in the EM Pack, India’s tentative weight will remain close to 20 per cent. India should witness net FII passive inflow of $2.7 billion to $3 billion,” Pagaria wrote.