MSCI India Index Update: Lenskart, Groww Added; India’s Weight Rises

MSCI has announced significant revisions to its India indices, incorporating four new stocks into the MSCI India Standard Index while removing three. These adjustments will elevate India’s weight within the index from 11.8% to 11.9%, expanding the total number of constituents from 165 to 166. The changes are set to become effective on August 31.

These index modifications are crucial, as global passive funds managing trillions of dollars align their portfolios with these benchmarks. Consequently, stock additions or removals necessitate corresponding buying or selling actions from index-linked ETFs and mutual funds.

Standard Index Inclusions and Exclusions

• New Additions: Lenskart Solutions, Adani Energy Solutions, Billionbrains Garage Ventures (Groww), and Laurus Labs.
• Exclusions: Astral, Balkrishna Industries, and SBI Cards and Payment Services Ltd.
• Astral and Balkrishna Industries will transition to the MSCI India Smallcap Index.

Nuvama Alternative & Quantitative Research projects that the four new inclusions could attract inflows totaling up to $600 million. Conversely, the exclusions of Astral, Balkrishna Industries, and SBI Cards are anticipated to result in net outflows ranging from $140 million to $170 million.

Smallcap Index Adjustments

The MSCI India Smallcap Index will also undergo notable changes with 13 new inclusions and 19 exclusions. This will adjust its constituent count from 461 to 455, while India’s weight in this specific index is expected to increase from 22.0% to 22.2%.

Weightage Revisions for Existing Stocks

MSCI has further revised the weightages of several existing stocks within the Standard Index. This includes an expected increase for Eternal, Adani Enterprises, Adani Ports & SEZ, JSW Energy, Adani Power, GMR Airports, and Swiggy.

• Increased Weightage Inflows:
• Eternal: approximately $674 million (due to projected near-doubling of free float).
• Adani Enterprises: just over $200 million.
• Adani Ports & SEZ, JSW Energy, Adani Power, GMR Airports, Swiggy: between $13 million and $77 million each.
• Decreased Weightage: Reliance Industries, Jio Financial Services, Indian Hotels, Aditya Birla Capital, and Colgate-Palmolive India.

These comprehensive changes reflect a dynamic shift in India’s representation across MSCI’s key indices, signaling potential rebalancing activity for index-tracking funds through August 31.