MSCI May 2024 Update: 13 New Additions and 3 Dropped

MSCI has made important adjustments to its Global Standard Index in its May 2024 review, by adding 13 new stocks. These additions include:

1. Canara Bank
2. JSW Energy
3. NHPC
4. Indus Towers
5. Phoenix Mills
6. PB Fintech
7. Sundaram Finance
8. Bosch
9. Jindal Stainless
10. Solar Industries
11. Torrent Power
12. Mankind Pharma
13. Thermax

The inclusion of these stocks is expected to result in healthy capital inflow into their shares signaling positive investor sentiment.

Exclusions from the Global Standard Index

Conversely three stocks have been excluded from the index:

1. Berger Paints
2. Indraprastha Gas
3. Paytm

MSCI or Morgan Stanley Capital International is a leading provider of equity, fixed income and hedge fund indices globally. MSCI Global Standard Index is a widely recognized benchmark for global equity markets used by institutional investors such as mutual funds, exchange traded funds or ETFs and pension funds to track the performance of their investments.

Changes in Stock Weights

In addition to the inclusions and exclusions certain stocks have seen changes in their weights within the index. Notable increases include:

1. YES Bank
2. Zomato
3. Vedanta
4. AU Small Finance Bank
5. Macrotech Developers
6. Polycab India
7. Samvardhana Motherson
8. Suzlon Energy

Conversely the weights of Dabur, ICICI Lombard General Insurance Company, Jubilant Foodworks and PI Industries have decreased in the index following the May update.

MSCI Smallcap Index Adjustments

According to Abhilash Pagaria head of Nuvama Alternative and Quantitative Research, MSCI May review is expected to generate approximately $2.5 billion in passive FII inflows into India.

MSCI Smallcap Index will see the addition of 29 stocks including Indraprastha Gas, Paytm, HUDCO, INOX India, Dilip Buildcon and Orchid Pharma.

15 stocks such as Borosil, Force Motors, Brightcom Group and Greaves Cotton will be removed from the Smallcap Index.

Effective Date and Overall Impact

The changes in the indices will be effective from 31 May 2024. Post rejig India's net stock count in MSCI Standard/EM Index will be 146. Smallcap Index will see a net inclusion of 14 stocks bringing India's total stock count in this index to 497.

India's representation in MSCI Emerging Markets Index is set to increase from the current 18.3% to closer to 19% marking the highest increase in weight in terms of basis points among any EM Index in this rejig.

Final Words

MSCI May 2024 review has resulted in adjustments including the addition of 13 stocks to the Global Standard Index and 29 to the Smallcap Index alongside a few key exclusions. These changes are expected to drive capital inflows and increase India's representation in MSCI EM Index highlighting a positive outlook for Indian equities.