MSCI Index November Rejig: HDFC Bank, Adani Energy Solutions Likely To Be Included, Check Full List

The upcoming MSCI index reshuffle, scheduled for announcement on November 7, is drawing significant market attention as investors eye possible weightage changes and inclusions that could attract substantial inflows into prominent Indian stocks. The highlight of this reshuffle is a potential weightage increase for HDFC Bank, which could attract inflows of approximately $1.88 billion.

Potential Inclusions and Expected Inflows
According to insights from Nuvama Alternative & Quantitative Research, several Indian companies have a high probability of being added to the MSCI Global Standard index, a move that would drive passive inflows from global funds. Names like Adani Energy Solutions, Kalyan Jewellers, BSE, Alkem Labs, and Oberoi Realty are leading the list of potential additions. Notably, Adani Energy Solutions could see inflows of around $306 million, while the Bombay Stock Exchange (BSE) is projected to draw $257 million. Oberoi Realty may attract $218 million, Alkem Laboratories $211 million, and Kalyan Jewellers India $210 million if added.

There is also a possibility of Voltas joining the MSCI index, which could attract a passive inflow of $306 million if it secures a spot. Voltas' inclusion, however, remains a borderline case, as it is yet to meet all criteria. The official announcement from MSCI is anticipated at around 2:30 am IST on November 7, with adjustments to be implemented on November 25.

MSCI Smallcap Index
Apart from the changes in the MSCI Global Standard Index, the MSCI Smallcap index is expected to undergo its own set of updates, with several notable Indian companies likely to make the cut. Expected new inclusions are Brainbees Solutions, Ola Electric, Jyoti CNC Automation, Eureka Forbes, Aadhar Housing, PC Jewellers, JSW Holdings, and Allied Blenders. According to Nuvama's calculations, these additions to the MSCI Smallcap index could bring in inflows totalling around $106 million.

Exclusions from the MSCI Index
While several companies stand to benefit from new inclusions, some existing constituents may face exclusions. Nuvama suggests that companies such as Fusion Finance, TCI Express, Sanofi Consumer, Hitachi Energy, and Hinduja Global could be removed from the MSCI index. Exclusions typically lead to passive outflows as funds tracking the index rebalance their portfolios, potentially pressuring the stock prices of these companies.

The MSCI index rebalancing, particularly with HDFC Bank's potential weightage increase, holds the promise of drawing large passive inflows into Indian equities. For the companies newly added to the MSCI Global Standard Index, the inflows from global funds can support stock price momentum and improve liquidity. Meanwhile, the expected additions to the MSCI Smallcap index are poised to boost smaller firms that may gain traction among international investors.

The rebalancing of indices like MSCI is closely followed by institutional investors, as it often results in capital movements across stocks. The potential adjustments on November 25 will likely attract global attention, as these changes can influence both the short-term demand and longer-term valuation of Indian equities.

*Inputs from Moneycontrol*