IREDA: Inclusion or increase in stock weightage in global indices such as MSCI and FTSE results in inflows from index-tracking passive funds. Exclusion from these indices typically results in outflows. As a result, the announcements are widely followed.
According to Nuvama Alternative & Quantitative Research, recently listed IREDA, Cello World, Honasa Consumer Products, and Signature Global are among the top contenders likely to make it into the MSCI Smallcap index. MSCI will make the official announcement on February 13, with changes scheduled for February 29. Other potential MSCI Smallcap index additions, according to Nuvama, include Jaiprakash Associates, RR Kabel, KPI Green Energy, Protean e-gov, Swan Energy, J Kumar Infraprojects, RattanIndia Power, Time Technoplast, Ethosa, Sandur Fedbank, DB Realty, Manganese, Kesoram Industries, and Sai Silks Kalamandir. – IREDA
These stocks have risen by 10-100% in the last three months, making their free float-adjusted market capitalization eligible for inclusion. According to Nuvama, IREDA’s inclusion could result in $11 million in passive inflows into the stock, while other stocks could see $2-7 million in inflows each.
MSCI Standard Index
Jindal Stainless, BHEL, Punjab National Bank, NMDC, and Oberoi Realty are currently eligible for inclusion in the MSCI Standard index. The current market prices must hold up for inclusion. Once included, the stocks could see $130-150 million in passive inflows each, said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research. The current market prices must hold up for inclusion. Once included, the stocks could see $130-150 million in passive inflows each, said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research.
Prestige Estates, Union Bank of India, Solar Industries, Alkem Labs, and Union Bank of India are a few more formidable candidates for the MSCI Standard index. However, according to Pagaria, these stocks still need to rise by another 2–6%. The MSCI Standard index may also be reached by Dalmia Bharat, NHPC, GMR Airports, FSN E-Commerce Ventures, Canara Bank, Mankind Pharma, Bosch, and Vodafone Idea if the stocks rise by 8–20 percent.
If these stocks don’t see upside momentum before Feb announcement, they can be strong candidates for the May review, Pagaria said. MSCI has established a deadline of January 18–31 for the February announcement. Indraprastha Gas may be excluded from the index if it falls 3-4 percent from its current market price. Nuvama stated that it is currently safe. India now has a 17.1% share of the MSCI emerging market index, up from 8% in October 2020. MSCI previously included nine Indian stocks in the MSCI Standard Index, including IndusInd Bank, Suzlon Energy, Persistent Systems, and Paytm parent One97 Communications.
