MSCI November Rejig: $2.5 bln Inflow In Indian Equities? This Bank May Gain Most - Details

The quarterly MSCI index rejig set for November 25 is expected to drive significant foreign institutional investor (FII) passive inflows into Indian equities, with an estimated $2.5 billion coming into the market. A key highlight is the rise in the weightage of HDFC Bank, which is expected to attract inflows of around $1.88 billion.

India’s MSCI Weightage to See Significant Increase
India’s representation in the MSCI Emerging Markets (EM) Index will increase from 19.3 per cent to nearly 19.8 per cent, marking the largest weightage boost among all emerging markets in this quarterly rejig. This change reflects India’s growing prominence in global equity markets, with the number of stocks in the MSCI Standard/EM Index rising to 156. Additionally, 13 stocks are being added to the MSCI India Smallcap Index, bringing the total count of small-cap stocks to 525.

Key Stocks to See Major Inflows
As part of the rejig, five Indian stocks will be added to the MSCI Global Standard Index, including BSE, Voltas, Alkem Laboratories, Kalyan Jewellers, and Oberoi Realty. Voltas is projected to see the largest inflows of about $300 million, while BSE could attract inflows of around $260 million. Other stocks like Kalyan Jewellers, Oberoi Realty, and Alkem Labs are expected to receive passive inflows in the range of $201 million to $241 million.

HDFC Bank in the Spotlight
HDFC Bank will be in focus as its weightage in the MSCI EM Index is set to increase, with inflows expected to reach around $1.88 billion. The move follows an earlier announcement in August when MSCI decided to raise the bank’s weightage in two phases. The expected increase in HDFC Bank’s representation will have a significant impact on the inflows into Indian equities.

13 Smallcap Stocks Added to MSCI Index
Alongside the large-cap stocks, 13 companies will be included in the MSCI India Smallcap Index. These include Eureka Forbes, Signature Global, Aadhaar Housing Finance, Indegene, and PC Jewellers. While these additions are smaller in scale, the expected inflows for each stock range between $3 million to $7 million, with a total of $71 million anticipated across all 13 smallcap stocks.

Adani Group Stocks Miss Out
The rejig did not include Adani Energy, despite earlier expectations. MSCI cited concerns over the company’s free float and explained its decision not to include the stock in the index. Additionally, the free float of two other Adani Group companies—Adani Green Energy and Adani Power—has been reduced, leading to lower weightage for these stocks in the MSCI EM Index.
The upcoming MSCI rejig is expected to bring substantial passive inflows to Indian equities, with significant attention on HDFC Bank and several newly added stocks, as global passive funds adjust their portfolios to reflect the changes in MSCI’s emerging market indices.