Birla Capital, L&T Finance enter MSCI Index

Synopsis

MSCI has added Aditya Birla Capital and L&T Finance to its Global Standard Index, anticipating nearly $495 million in passive inflows. Indian Railway Catering And Tourism Corporation (IRCTC) will be excluded, potentially seeing $141.6 million in outflows. The MSCI India Small Cap Index also saw significant rejigging with additions and deletions.

Mumbai: Global index provider MSCI has added Aditya Birla Capital and L&T Finance to its Global Standard Index in the February review. The changes, effective after market close on February 27, are expected to trigger passive inflows of nearly $495 million into the two stocks, according to Nuvama Alternative and Quantitative Research.

Index revisions typically move stocks because trillions of dollars in passive global funds align their portfolios with benchmark compositions. Additions prompt index-linked ETFs and passive funds to buy the stock, while deletions force selling.

India's weight in the MSCI Standard Index will remain STEADY at 14.1% with the total number of represented companies increasing from 164 to 165, said Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research.

Indian Railway Catering And Tourism Corporation (IRCTC) will be excluded from the Standard Index, and could see outflows of $141.6 million as per Nuvama's estimates. MSCI rebalanced its India Small Cap Index, adding seven stocks and deleting 34.

The additions are Ashapura Minechem, Canara HSBC Life Insurance Company, Emcure Pharmaceuticals, JSW Cement, National Securities Depository, Premier Energies, and Thyrocare Technologies.

Among the 34 deletions are Ashoka Buildcon, Gokaldas Exports, Just Dial, Sterlite Technologies, and Zaggle Prepaid Ocean Services. "As the small-cap universe remained under pressure, the stock count in this space will reduce from 508 to 480 after the rejig," said Pagaria.

Nuvama estimates total inflows of $50 million into the newly added small-cap names.

Separately, the weight of AU Small Finance Bank in the Global Standard Index is set to rise, which Nuvama said would draw $172 million of passive inflows.

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