MSCI includes 6 Indian stocks in its index

Mumbai: Global index services provider MSCI has included six Indian stocks in its standard index as part of its semi-annual review, which was announced on November 10.

ABB India, Bajaj Holdings & Investment, Indian Hotels, Tube Investment, TVS Motors, and Varun Beverages are the new entrants in the MSCI Standard Index.
The changes in constituents for the MSCI global standard indices will take place on November 30. These changes are expected to result in a flow of a little over $1 billion, or around ₹8,300 crore, into these six stocks by the end of this month, according to an estimate by IIFL Alternative Research.
These stocks may remain under foreign fund managers' radar over the coming weeks, which may give near-term appreciation in share prices.

Tube Investment and Indian Hotels could see an inflow of $207 million (₹1,666 crore) each when the stocks are included on November 30, said IIFL. Indian Hotel rallied 44% in last six months, while Tube Investment gained 54% during this period.

Varun Beverages and TVS Motors are expected to see an inflow of $187 million (₹1,504 crore) and $176 million (₹1,417 crore), respectively. The other two stocks, Bajaj Holdings, and ABB India will likely see inflows of $132 million (₹1,063 crore) and $118 million (₹950 crore), respectively, during the MSCI rejig later this month.

MSCI indices are widely tracked globally, with several passive funds replicating their portfolios in line with stock weightages. These funds must buy or sell if a stock's weight in the index is increased or reduced.

According to analysts, the stocks largely languish or log single-digit gains during the MSCI announcement date and from the announcement date to the adjustment date.

"On adjustment day, 52% of the time stocks have settled flat while 48% of the time they have closed in red, indicating the higher rebalance volume is matched by the selling flow of hedge fund and event traders," said Abhilash Pagaria, head, Nuvama Alternative & Quantitative Research.