BackMSCI rejig from 31 May: Adani Transmission, Adani Total may see outflow of $356 million as they exit; details here
MSCI Global Standard Index will exclude Adani Transmission, Adani Total Gas, and Indus Towers, while adding Max Healthcare Institute, HAL, and Sona BLW Precision, effective May 31. Nuvama Alternative & Quantitative Research predicts a net passive foreign flow of $600-700m to India.
PremiumMSCI Global Standard Index's latest rejig will come into effect from May 31st, where three stocks will be excluded of which two belonged to Adani Group. These are Adani Transmission, and Adani Total Gas and the other to exit would be Indus Towers. On the other hand, three stocks Max Healthcare Institute, Hindustan Aeronautics, and Sona BLW Precision will be included.
As per Nuvama Alternative & Quantitative Research report, India Standard Index will see three add and three deletes. In its latest update, Nuvama said, "MSCI Rejig is scheduled on May 31 , 2023 and India should receive net passive foreign flow in upwards of $500 million.
Nuvama's latest report showed that Adani Transmission will see an outflow of $189 million as it will exit the index. While Adani Total Gas will record an outflow of $167 million. Together, the two Adani firms will likely see an outflow of $356 million.
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Currently, Adani Transmission and Adani Total Gas have a weightage of 0.31% and 0.28% on the index with 18 million equity shares each.
Meanwhile, Indus Towers to record an outflow of $84 million. The Bharti Airtel-backed teleco's weightage is currently at 0.14% with 44 million shares.
In the case of Indus Towers, last week, Abhilash Pagaria analyst at Nuvama Institutional Equities said, "Going by past instances of MSCI stock exclusions (Zee, Biocon etc), I believe INDUSTOW should bottom out by next week. As post exclusion, we tend to see stocks ideally consolidating for some time / seeing rebound of 10% to 15%." She added, “Contra Long bet for short term - One can initiate partial longs now and rest on the rebalance day."
On the contrary, 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.
HAL with a weightage of 0.33% and 5 million shares, 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.
Furthermore, a total of 16 stocks will witness weightage addition from May 31st. These are --- 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.
Owing to the upside in weightage, Nuvama expects Kotak Bank to see an inflow of $800 million, Maruti Suzuki an inflow of $87 million, ONGC an inflow of $71 million, Ultratech Cement an inflow of $70 million, and low-cost carrier Indigo an inflow of $65 million.
Among the new-age companies, Zomato is the only stock that will register a weightage upside. Nuvama expects this online food delivery firm to record an inflow of $63 million.
Also, Yes Bank is expected to witness an inflow of $14 million.
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On the other hand, 21 stocks' weightage will be trimmed from May 31st. The majority of them are large-caps with India's most valued firm Reliance Industries (RIL) at the top of the chart.
Nuvama expects RIL to record an outflow of $151 million due to the rejig, followed by Infosys (outflow of $105 million), ICICI Bank (outflow of $97 million, HDFC (outflow of $90 million), and JSW Steel (outflow of 73 million).
Other stocks to see their weightage decline are ---- TCS, Tech Mahindra, Hindalco, Divi's Lab, HUL, Axis Bank, Dr. Reddy's Lab, Bharti Airtel, Axis Bank, Shree Cement, Bajaj Finance, BPCL, Mphasis, HPCL, Avenue Supermarts, Tata Consumer, and Tube Investment.
Under the MSCI small-cap index, stocks like Rail Vikas Nigam, Anupam Rasayan, Bikaji Foods, Ircon, Ujjivan Small Finance Bank, Religare Enterprises, and Fusion Micro Finance among others will be included.
While stocks like Max Healthcare, Polycab India, Gillette India, Dilip Buildcon, and PC Jeweller among others will be excluded from the MSCI's small-cap index.
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