MSCI Reshuffle Expected to Garner $2 Billion Inflows; Indus Towers, PB Fintech, and Mankind Pharma among potential additions.

Summary –

The upcoming MSCI indices review, scheduled for May 15, could bring about $2 billion in inflows to Indian equities, per Nuvama Research. Key contenders for inclusion in the MSCI Standard and Global Standard indices include Indus Towers, PB Fintech, and Phoenix Mills. Thermax teeters on the edge of inclusion, while Paytm, Indraprastha Gas, and Berger Paints may face exclusion. Nuvama predicts inclusions for stocks like Waaree Renewable in the MSCI Small-cap index. India's stock count in MSCI indices is expected to approach 150. India's weight in the MSCI Emerging Market Index has risen to 18%, expected to surpass 20% by late 2024, driven by regulatory reforms and strong equity performance, particularly in midcaps.

The MSCI indices are scheduled for review on May 15, with changes set to take effect on May 31. According to Nuvama Alternative & Quantitative Research, this review could bring about inflows totaling $2 billion into domestic equities.

Key contenders for inclusion in the MSCI Standard index include Indus Towers, PB Fintech, Phoenix Mills, Sundaram Finance, and Mankind Pharma, among others. On the other hand, Nuvama identifies Paytm, Indraprastha Gas, and Berger Paints as potential exclusions.

Several stocks are strongly positioned for inclusion in the MSCI Global Standard index, including Indus Towers, PB Fintech, Phoenix Mills, Sundaram Finance, Solar Industries India, NHPC, Bosch, Jindal Stainless, Torrent Power, Mankind Pharma, JSW Energy, and Canara Bank.

Nuvama predicts significant inflows, with Indus Towers expected to lead with $224 million, followed by PB Fintech and Phoenix Mills at $223 million and $213 million, respectively. Other contenders are estimated to attract flows ranging from $144 million to $207 million.

Thermax teeters on the edge of inclusion in the MSCI index, according to Nuvama. Should it make the cut, the stock could witness inflows totaling $139 million. Conversely, Nuvama identifies Paytm, Indraprastha Gas, and Berger Paints as likely candidates for exclusion. If this occurs, these stocks might experience combined outflows of approximately $283 million.

For the MSCI Small-cap index, Nuvama anticipates inclusions for stocks like Waaree Renewable, Vedant Fashions, Va Tech Wabag, RR Kabel, and Sanghvi Movers, among others. Conversely, Tatva Chintan Pharma, Borosil, Sharda Cropchem, and Dreamfolks Services are expected to be excluded.

Currently, India boasts a total of 136 stocks in both the MSCI Standard index and the Emerging Market index. Nuvama Alternative & Quantitative Research predicts this count to approach 150 in the upcoming review.

As of May 13, India's weight in the MSCI Emerging Market Index has surged to approximately 18 percent, a notable increase from around 8 percent in early 2020. Nuvama forecasts that by the second half of 2024, India will surpass the 20 percent threshold in the Emerging Market index.

Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research, attributes India's ascent in the MSCI EM space to several factors: the implementation of standardized Foreign Ownership Limits in 2020, robust performance by Indian equities, particularly in the midcap segment, and the relative underperformance of other EM markets, notably China.

About RR Finance:

An integrated financial services group, offering a wide range of financial products and services to corporates, institutions, high-net-worth individuals, and retail investors.

Explore a wide range of investment opportunities with RR Finance: https://www.rrfinance.com/

Disclaimer: The content of this article is for informational purposes only and does not constitute financial advice.