MSCI India Index Overhaul: Lenskart, Adani Energy Included as SBI Cards Face Exclusion

MSCI India Index Overhaul: Lenskart, Adani Energy Included as SBI Cards Face Exclusion​

The MSCI has announced major restructuring of its India Indices, signalling significant shifts in market composition. Several mid-cap companies are being added to the primary India Index, while established names like SBI Cards and Astral are set for removal from that specific list. These changes are expected to attract substantial foreign investment inflows, though some weightage reductions pose potential outflow risks as well.

Companies Included in MSCI India Index​

Early Thursday, August 13, MSCI announced the inclusion of four companies into the MSCI India Index. Lenskart Solutions Ltd., Adani Energy Solutions Ltd., Billionbrains Garage Ventures Ltd., and Laurus Labs Ltd. are among those added to the esteemed index. The inclusion of these stocks is anticipated by Nuvama Alternative & Quantitative Research to draw potential inflows amounting up to $600 million into the market.

Stocks Moving to MSCI India Smallcap Index​

The restructuring also includes additions and exclusions for the MSCI India Smallcap Index. Companies like Amagi Media Labs, Ather Energy, Clean Max Enviro Energy Solutions, Dalmia Bharat, E2E Networks, Embassy Developments, L&T Technology Services, Rubicon Research, Sedemac Mechatronics, Sky Gold and Diamonds, Urban Company, and WeWork India will be included in the Smallcap Index.

However, some names are being excluded from this index as well. Aurionpro Solutions, CMS Info Systems, Entero Healthcare Solutions, GMR Power & Urban Infra, ICRA, Latent View Analytics, MAS Financial Services, Mastek, MOIL, Network18, Nippon India Life Asset Management, PTC India, Rallis India, RCF, RattanIndia Power, Star Cement, Transrail Lighting and Valor Estate have been excluded from the MSCI India Smallcap Index.

Impact of Exclusions on Primary Index​

The primary MSCI India Index will see several high-profile exclusions announced by the brokerage. Astral Ltd., Balkrishna Industries Ltd., and SBI Cards and Payment Services Ltd. are set to be removed from the main index. Notably, Astral and Balkrishna Industries will not leave the market entirely but are being moved down to the MSCI India Smallcap Index.

Nuvama Alternative notes that the removal of these three entities is expected to result in net outflows ranging between $140 million and $170 million.

Changes in Weightages within MSCI Standard Index​

MSCI has also detailed changes regarding the weightages of several stocks across the MSCI Standard Index. Companies such as Eternal, Adani Enterprises, Adani Ports & SEZ, JSW Energy, Adani Power, GMR Airports, and Swiggy are slated to see their weightages increase.

These upward adjustments carry significant investment potential. Nuvama Alternative estimates that the increased weighting of Eternal could attract nearly $700 million in potential inflows. Similarly, Adani Enterprises is anticipated to generate inflows exceeding $200 million due to its higher listing status.

Declining Weightage and Potential Outflows​

On the other side of the adjustments are reduced weightages for several large-cap names. Reliance Industries, Jio Financial Services, Indian Hotels, Aditya Birla Capital, and Colgate-Palmolive India are all listed among those facing reduced weighting in the MSCI Standard Index.

According to Nuvama Alternative, these lower weights could potentially trigger outflows ranging from $16 million up to a maximum of $523 million as global institutional investors rebalance their portfolios based on the changes.