MSCI Quarterly Rejig: Check Out Stocks That May Be Included And Likely Inflows
MSCI is likely to include four stocks and change the weightings of nearly five companies in the upcoming May review.
Index provider MSCI is likely to include four stocks and change the weightage of nearly five companies in this month's index review, according to Morgan Stanley.
The brokerage expects MSCI to include Hindustan Aeronautics Ltd., Max Healthcare Institute Ltd., Cummins India Ltd., and Ashok Leyland Ltd. in the index. The additions are expected to bring $1.3 billion, or about Rs 10,632.58 crore, of inflows.
Meanwhile, Nuvama Alternative and Quantitative Research expects MSCI to add Hindustan Aeronautics Ltd. and exclude Indus Tower from the index. The brokerage also forecasts a possibility of Power Grid Corp of India Ltd.'s inclusion in the index with a "borderline conviction".
MSCI India's weight in MSCI Emerging Markets has risen from 9% to 14% since October 2019, and the number of stocks in the index has risen from 80 to 114. After the May review, four more stocks are expected to be added to this list.
According to the MSCI stock inclusion methodology, the most important conditions to be met are the required minimum market cap and a free float-adjusted market capitalisation equal to or higher than 50% of the minimum size requirement. Other criteria also include the global minimum foreign inclusion factor requirement and the minimum foreign room requirement, among others.
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Morgan Stanley On MSCI Additions & Weights Change
Morgan Stanley forecasts that Hindustan Aeronautics will be included in the index after a huge stake sale by the Life Insurance Corporation of India.
On the other hand, Max Healthcare Institute, Cummins India, and Ashok Leyland will be migrated from the MSCI India small-cap index to the standard index.
MSCI is likely to increase the weighting of Kotak Mahindra Bank Ltd., InterGlobe Aviation Ltd., and Samvardhana Motherson International Ltd., according to the brokerage.
While Kotak's weight is going to be bumped as its foreign room exceeds 25%. It is likely to bring inflows of $745 million, or about Rs 611.20, crore, alone, as compared to a total of $1.3 billion of inflows that are expected.
InterGlobe Aviation and Samvardhana Motherson, on the other hand, are likely to see a weight increase following a stake sale by their promoters.
The weightings for Adani Transmission Ltd. and Adani Total Gas Ltd. are expected to be reduced in the review.
MSCI confirmed a FIF reduction from 25% to 14% for Adani Transmission and from 25% to 10% for Adani Total Gas during the May review.
Nuvama On MSCI Additions & Weights Change
The brokerage expects $190 million of inflows in Hindustan Aeronautics after its inclusion in the index, whereas it expects $83 million of outflows after Indus Tower's exclusion.
Weight additions are expected in Kotak Mahindra Bank Ltd., InterGlobe Aviation Ltd., Samvardhana Motherson International Ltd., and Zomato Ltd.
Brokerage expects weight cuts in Adani Transmission Ltd., with a total outflow of $122 million and Adani Total Gas Ltd., with an outflow of $84 million.
The index provider will release the results of its index review on the morning of May 12, and all changes will be made as of the close of May 31, effective June 1.
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