MSCI Indices Rejig In February: Here's What Nuvama Expects
Nuvama projects that India's index representation could cross 20% by early to mid 2024.
MSCI Inc. will announce the list of companies for its index rejig in February next year.
Due to India's current momentum and outperformance as compared with other emerging markets, Nuvama projects that the index representation could cross 20% by early to mid-2024.
From the beginning of November this year, Nuvama Alternative and Quantitative Research highlighted the names that could make it to the MSCI Feb. 24 rejig and was positive about most of them.
The global cut-off period for the MSCI Feb. 24 rejig is Jan. 18 to 31, though the selection day will happen in the initial few days of the cut-off period.
The announcement for the same is scheduled for Feb. 12, with adjustments on Feb. 29, according to Nuvama.
MSCI Global Standard Index
Jindal Stainless Ltd., Punjab National Bank, Bharat Heavy Electricals Ltd. and Oberoi Realty Pvt. could be the probable inclusions if they broadly maintain their current levels, according to the brokerage.
Other names on the radar include Dalmia Bharat Ltd., Union Bank of India, Alkem Laboratories Ltd. and FSN E-Commerce Ventures Ltd., among other companies, if they have a 5–10% price surge.
Indraprastha Gas Ltd. and Petronet LNG Ltd. could be potential exclusions, as they need to correct further between 3% and 20%, it said.
India's representation on the MSCI EM pack was steady at around 8% from 2015 till October 2020. Since November 2020, Nuvama has doubled its representation and it is currently at 16.9%.
This can be attributed to multiple reasons:
India's healthy performance in equity markets, especially in its mid-cap segment.
India's stock count in the MSCI Standard index has risen to 131 in 2023, with the inclusion of a net of 17 Indian stocks over the past four reviews.
With a consistent flow from DII and stable participation from FIIs, there is a chance for India to surpass a 20% weightage in early 2024 itself.
