BHEL, PNB enter MSCI as India's weightage reaches historic high
India has reached a record high of 18.2% in the MSCI Global Standard (Emerging Markets) Index after the February review. Weightage has almost doubled since November 2020. This increase is due to India's standardized foreign ownership limit (FOL) in 2020, a strong domestic equities rally, and the underperformance of other emerging markets, particularly China. The changes will take be implemented after the market closes on February 29.
Five Indian stocks enter MSCI Global Standard Index
As part of the February review, five Indian stocks have been added to the MSCI Global Standard Index. No deletions have been made for this month. Punjab National Bank (PNB) and Union Bank of India joined the large-cap index, while Bharat Heavy Electricals (BHEL) and NMDC were added to the mid-cap index. GMR Airports Infrastructure was moved from the small-cap to mid-cap index. In total, 24 securities from 10 Asia-Pacific countries will join the MSCI Global Standard Index.
Changes in MSCI Global small cap index
The MSCI Global small cap index now includes 27 new Indian equities. Some of the most popular additions include Honasa Consumer (Mamaearth), SpiceJet, and Cello World. As many as six stocks have been removed this month. The deletions include Barbeque Nation, GMT Airports Infra, Prestige Estates, Privi Speciality Chemicals, Rail Vikas Nigam (RVNL), and Torrent Power.
Potential FPI inflows and India's future representation in the index
Nuvam estimates that quarterly rejig could result in $800 million to $1 billion inflows from passive FII funds. India's representation in MSCI EM Index is currently around 17.8%, and after February's rejig, it is expected to reach around 18.5%, according to Abhilash Pagaria of Nuvama Alternative & Quantitative Research. Nuvama predicts that India could surpass 20% weight in the MSCI Global Standard index by early 2024, thanks to consistent domestic institutional investor flow and steady foreign portfolio investor participation.
