By Bharat Rajeswaran
(Reuters) -MSCI late on Wednesday added five Indian companies to the Global Standard Index, a move that broker Nuvama said would increase the country’s weight in the index to 20%, further narrowing the gap with China.
MSCI said there would be 156 Indian stocks in the index, but that is only a quarter of the 598 in China, indicating there is room for further inclusion of Indian stocks in the index.
The changes will take place after markets close on November 25, MSCI said.
The inclusion of the shares will lift India’s weighting in the index to a record 19.8%, compared to 19.3% previously, narrowing the gap with China, which has fallen to 26.8% from 27% , Nuvama Alternative and Quantitative Research estimate.
It is also likely to attract $2.5 billion in passive inflows into Indian equity markets, Nuvama said.
China has the highest weighting in the MSCI Global Standard index, while India has been in second place since the end of 2021.
Air conditioner manufacturer Voltas, real estate developer Oberoi Realty, stock market operator BSE, Kalyan Jewelers and drug manufacturer Alkem Laboratories are the latest additions to the index.
Indian markets saw an inflow of around $3 billion into equities following the previous MSCI rebalance in August, when seven stocks were added.
“We remain extremely bullish on India, especially with active participation from mutual funds and high net worth individuals (HNIs)/retail investors, and expect many more inclusions in the emerging markets index,” said Abhilash Pagaria, head of Nuvama Research.
Seven existing stocks, including top private lender HDFC Bank and Tata Power, saw their weightings increase.
HDFC Bank is now the highest weighted Indian stock in the MSCI indices at 7.08%, surpassing Reliance Industries’ 6.08%.
So far in November, no Indian companies have been removed from the MSCI Global Standard Index.
In addition, approximately 13 companies, including Eureka Forbes, Indegene and PC Jeweler, were added to the MSCI Small Cap Index, bringing the total number of small-cap stocks to 525.
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Abinaya Vijayaraghavan)
