Index provider MSCI announced the results of its November review in the early hours of Thursday, adding four Indian stocks to the MSCI Global Standard Index and removing one. Life Insurance Corporation of India (LIC), Coforge, Adani Green Energy and Meesho made the cut, while PI Industries was excluded from the index.
The additions were in line with analyst expectations. The review is part of MSCI's regular rebalancing of its global indices, which are tracked by index funds and exchange-traded funds around the world, so changes to the list typically trigger buying and selling by funds that mirror the index.
Four additions, one exit
LIC leads the list of new entrants, joined by IT services firm Coforge, renewable energy major Adani Green Energy and e-commerce platform Meesho. Their inclusion means index-tracking funds will need to buy these shares when the changes take effect.
On the other side, PI Industries, the agrochemicals maker, was deleted from the Standard index. Its exclusion could lead to outflows of about $119 million, according to estimates from Nuvama Alternative and Quantitative Research.
What the inflows could be
Nuvama Alternative and Quantitative Research estimates that Coforge's inclusion could draw the largest flows among the four, at about $630 million. LIC could see inflows of about $468 million, followed by Adani Green Energy at $348 million and Meesho at $307 million.
Taken together, the four additions could bring in about $1.75 billion in passive flows. These are estimates of the buying that index funds would need to do to match the new index weights, and actual flows can differ.
India's weight rises
With a net addition of three stocks, India's weight in MSCI's standard Emerging Market Index will rise from 12.9% now to 13.1% after the review is implemented. A higher weight means a larger share of the money tracking the index flows into Indian shares.
The smallcap index also saw churn. The MSCI India Smallcap index added 11 new names and removed 29 stocks in the same review.
When the changes take effect
The rebalancing will take place on November 30. Funds tracking the MSCI indices will adjust their holdings around that date to reflect the new list of constituents.
