The MSCI is set to rebalance its indices on Friday, a move expected to result in net inflows of $5.5 billion into the Indian stock market. The rebalancing, announced on August 13, 2024, will be implemented as of the close of trading on August 30.
Increase in HDFC Bank’s Weight
As part of the MSCI Global Standard Index adjustments, seven stocks will be added, while one will be excluded. Additionally, Morgan Stanley Capital International (MSCI) has announced plans to increase the weight of HDFC Bank in the index, a change that will be executed in two tranches.
The first tranche will occur after today’s rebalancing, with the second scheduled for the November review, contingent upon the foreign headroom remaining at least 20%.
The increase in HDFC Bank’s weight in the MSCI indices, planned in two phases, will see the first adjustment take place after today’s rebalancing, with the second phase expected in November, assuming the foreign headroom criteria are met.
Index Adjustments and Stock Additions
Among the seven stocks being added to the MSCI Global Standard Index, Dixon Technologies is projected to attract the highest passive inflows, estimated at $257 million. Vodafone Idea follows closely with expected inflows of $254 million.
Zydus Lifesciences and Oil India are each anticipated to receive a little over $200 million, while Rail Vikas Nigam Ltd (RVNL) may see inflows of $180 million. Prestige Estates Projects and Oracle Financial Services are projected to receive $160 million and $152 million, respectively.
Impact on Indian Equities
According to IIFL Alternative Research, the MSCI August 2024 review is expected to lead to significant inflows into Indian equities, with the country’s weight in the MSCI Emerging Market (EM) Index likely to rise to a record 20% from the current 19.4%.
This rebalancing and the associated changes underscore the growing significance of Indian equities in global markets, with the MSCI adjustments poised to bolster capital inflows and enhance India’s presence in the MSCI Emerging Market Index.
