MSCI rejig: Indus Towers, Sundaram Finance, NHPC among 12 stocks likely to be included; Paytm shares may exit

Indus Towers, Sundaram Finance, Solar Industries India and Mankind Pharma are among the twelve stocks that are likely to be included in the MSCI Global Standard index in its May rebalancing. On the other hand, One 97 Communications, the parent company of fintech major Paytm, could be excluded, according to Nuvama Institutional Equities.

These twelve stocks have already met the MSCI criteria and may see a total inflow of $2 billion, as per Nuvama estimates. Among stocks, Indus Towers is likely to see $189 million in passive inflows, while Sundaram Finance could attract inflows worth $174 million and Solar Industries India may see $164 million in inflows.

Other likely inclusions include Mankind Pharma, Jindal Stainless, Torrent Pharma, NHPC and Bosch which could attract passive inflows of more than $150 million each.

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Canara Bank, Zydus Lifesciences, Oracle Financial Services Software and Oberoi Realty are likely other contenders for inclusion in the MSCI Global Standard index and may see more than $100 million in passive inflows each.

Meanwhile, Paytm could be excluded and may see outflows worth $74 million.

The global cut-off period for the index aggregator’s May 24 review is set to commence from April 17 to April 31 and the announcement is likely on May 13, while the adjustments will be made on May 31. 

“Based on my experience, the cut-off typically occurs in the initial phase. The official announcement is slated for May 13 , with adjustments by passive indices scheduled for May 31,” said Abhilash Pagaria, Head at Nuvama Alternative & Quantitative Research.

In the case of Indus Tower and Mankind Pharma, this quarter witnessed exits from strategic investors, leading to a higher float. Both companies are required to report their March 24 shareholdings before April 17 for revised float. 

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Given that the cut-off period is still a few weeks away, and with fluctuating prices in both Indian and global markets, the market-cap thresholds are subject to change. It's imperative to closely monitor borderline names and stocks under consideration, Pagaria said.

Meanwhile, India’s representation in the MSCI Emerging Markets pack has nearly doubled to 17.7% at present from around 8% in October 2020. This achievement can be attributed to multiple factors like India’s standardized Foreign Ownership Limit (FOL) in 2020, robust performance by Indian equities, particularly in the midcap segment, leading to numerous inclusions in every review and relative underperformance by other EM packs, especially China.

Moreover, with a consistent flow from domestic institutional investors (DII) and now if steady foreign institutional investors (FII) participation resumes, Pagaria believes there is potential for India to surpass a 20% weightage in the MSCI EM Index by the second half of 2024 itself.

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