NMDC, PNB, BHEL among top contenders for MSCI Global Standard Index inclusion: Nuvama

NMDC, Punjab National Bank (PNB), BHEL and Union Bank Of India are the top contenders for the inclusion in MSCI Global Standard Index after the February review which will result in significant inflow in these stocks, according to Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research.

Apart from these four, NHPC and Jindal Stainless, too, may be included in the MSCI Global Standard Index.

The inclusion may result in an inflow of $186 million in NMDC, $180 million in PNB, $156 million in BHEL, $140 million in Union Bank Of India, $223 million in NHPC and $148 million in Jindal Stainless, Pagaria said.

On the other hand, IREDA, Cello World, Honasa Consumer, Jaiprakash Associates and RR Kabel are among the stocks that could be included in the MSCI Smallcap Index post-February review.

However, Prestige Estates, GMR Airports, Rail Vikas Nigam and Privi Speciality could be excluded from the MSCI Smallcap Index after the February 2024 review.

Overall, India could see close to $800 million to $1 billion FII passive inflow and PSUs are ruling the inclusions in the February Review, according to the calculations of Nuvama Alternative & Quantitative Research.

MSCI will announce the February 2024 rejig on Tuesday, February 13, around 3:30 am IST. The adjustment will take place on February 29, 2024.

India currently holds approximately 17.8 per cent representation in the MSCI EM Index, and following the February rejig, Pagaria anticipates India's representation to move around 18.5 per cent.

India's standardized Foreign Ownership Limit (FOL) in 2020, robust performance by Indian equities, particularly in the Midcap segment, leading to numerous inclusions in every review, and relative underperformance by other EM packs, especially China are some of the key factors which have boosted India's representation in the MSCI EM pack, Pagaria said.

"In 2023, India's stock count in the MSCI Standard index has risen to 131, with the inclusion of a net of 17 Indian stocks over the past four reviews. This marks an improvement from 2022, where only a net of 9 Indian stocks were included. The notable factors contributing to this increase in 2023 include India's substantial rally compared to other Emerging Markets and MSCI's shift from semi-annual to quarterly rebalancing for stock inclusions/exclusions," said Pagaria.

"With a consistent flow from DII and now if steady FII participation resumes, there is potential for India to surpass a 20% wt. in the MSCI EM Index by early 2024 itself," Pagaria said.

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