Investment research firm Morgan Stanley Capital International (MSCI) on Thursday rejigged its MSCI India Index as a part of its regular review for February. A few Indian stocks were added to its portfolio, whereas a few others were removed. These changes will be effective from February 28, 2023.
Index funds, hedge funds, exchange-traded funds and other global Institutional investors use MSCI’s indices and governance tools to do their allocations. These indices are considered as benchmarks and inclusions or exclusions in them can lead to huge inflows or outflows in the stocks. This happens because global fund managers will have to compulsorily sell these stocks from their portfolio to align with the changed weightage.
A security’s Foreign Inclusion Factor (FIF) must reach a certain threshold to be eligible for inclusion in an MSCI index.
In a release, MSCI said that Bank of Baroda and CG Power & Industrial have been included in the MSCI India index and Biocon has been excluded from the index. This could mean that there will be inflows of funds in Bank of Baroda and CG Power & Industrial, whereas Biocon might see outflows.
MSCI changed the FIF in a few names and a major downward revision has been seen in Adani Transmission, Adani Total Gas, and Adani Enterprises. This will likely trigger outflows in these stocks.
A few other stocks that saw a reduction in weightage were HCL Technologies, Jindal Steel & Power, Shriram Finance and ACC.
Written by Simran Bafna
