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MSCI Global Index Rejig: Adani and Reliance to See Outflows

The MSCI rebalances the Global Index, India to receive a net foreign inflow of over $500 million.

The MSCI has announced a few modifications and rebalances to the Global Standard Index, which will come into effect from May 31. After the rejig, India will receive a net passive foreign flow of over $500 million. Investors are expected to see turbulent moves ahead of the revisions’ effective dates.

Shares of two Adani group companies, Adani Transmission and Adani Total Gas and Indus Towers, will be excluded from the index. 

The two Adani firms will likely see an outflow of $356 million. Adani Transmission carried a 0.31% weightage in the index and would lose $189 million in 180 lakh equity shares. The exclusion of Adani Total Gas, with a 0.28% weight, would result in an outflow of $167 million. Indus Towers, with a 0.14%, is expected to lose $84 million. 

MSCI will delete the two Adani securities at the lowest system price if they trade at the lower price limit of 5% for at least 5 minutes cumulatively or at the official closing prices per the MSCI index calculation methodology.

At the same time, shares of Max Healthcare Institute, Hindustan Aeronautics, and Sona BLW Precision will be added.

The three entrants are expected to record an upside in the funds flow. Max Health will enter the MSCI index list with 47 million shares and a weightage of 0.52%. The company is expected to witness an inflow of $312 million.

With a weightage of 0.33% and 5 million shares, HAL is expected to record an inflow of $196 million. Sona BLW, with a weightage of 0.29% and 26 million shares, is seen to post an inflow of $171 million.

Twenty-one stocks, including heavyweights like Infosys, TCS, ICICI Bank and HDFC, will reduce their weights in the index. Other stocks to lose their weightage are– Tech Mahindra, Hindalco, Divi’s Lab, HUL, Axis Bank, Dr Reddy’s Lab, Bharti Airtel, JSW Steel, Shree Cement, Bajaj Finance, BPCL, Mphasis, HPCL, Avenue Supermarts, Tata Consumer, and Tube Investment.

India’s most valued firm, Reliance Industries (RIL), will top the chart with a possible $151 million outflow. With 44 million shares, Bharti Airtel now has a weightage of 0.14%.

The weightage of 16 stocks– Kotak Bank, Maruti Suzuki, ONGC, Ultratech Cement, Interglobe Aviation, Zomato, Yes Bank, SBI Card, Samvardhana Motherson, Cipla, Power Grid, NTPC, M&M, Siemens, TVS Motor– will be increased.  

Analysts at Nuvuma expect these stocks to see inflows ranging anywhere between $14 million to $800 million. Zomato will add 770 lakh shares to its weight in the index triggering inflows of $63 million. 

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