Following MSCI’s February evaluation, this adjustment is set to take effect post the market’s closure on February 29, a Reuters report said.
Since November 2020, India’s position in the index has seen a significant rise, currently standing at 17.9%.
Tata Motors and Macrotech Developers have been introduced to the MSCI Domestic Indexes as large-caps, with Punjab National Bank, Canara Bank, and Embassy Office Park REIT joining the mid-cap segment.
Bharat Heavy Electricals, Persistent Systems, MRF, Suzlon Energy, and Cummins India were transitioned to the mid-cap index from the small-cap category, and approximately 27 small-cap stocks were newly added to the MSCI Domestic Index, with six others being reclassified or removed.
This elevation is largely credited to the continuous surge in India’s stock market and the comparative lag in performance of other emerging markets, notably China, as stated by Nuvama Alternative & Quantitative Research.
India now holds the second-largest weight in the MSCI Global Standard index, following China.
Nuvama predicts that with ongoing investments from domestic institutions and active participation by foreign portfolio investors, India’s share in the index could exceed 20% by the early months of 2024.
In its recent update, MSCI included five new Indian companies in its Global Standard index, while choosing not to remove any. Conversely, it excluded 66 Chinese companies but added five.
Punjab National Bank and Union Bank of India were included in the large-cap segment, while Bharat Heavy Electricals and NMDC were added in the mid-cap category. GMR Airports Infrastructure was reclassified to the mid-cap segment from the small-cap category.
Nuvama projects that the February assessment could result in up to $1.2 billion in passive foreign investments flowing into India.
What is the MSCI global standard index?
The MSCI Global Standard Index is a prominent stock index created by Morgan Stanley Capital International (MSCI) that represents large and mid-cap equity performance across 23 developed market countries. It covers approximately 85% of the free float-adjusted market capitalization in each country, providing a broad and comprehensive reflection of the global equity market.
The index is widely used by institutional investors around the world for benchmarking global portfolios and making investment decisions. It includes companies that meet specific criteria for market size, liquidity, and financial viability, among others, ensuring that the index reflects the performance of only those companies that are considered to be stable and investable.
The inclusion of a country or company in the MSCI Global Standard Index is significant because it signals to the international investment community that the market or company is accessible and operates under market-friendly conditions. This often results in increased foreign investment flows into the country’s stock market or into the stocks of the company.
For countries and companies, being part of the MSCI Global Standard Index can lead to greater visibility, higher liquidity, and access to a broader base of potential investors. It’s a mark of recognition and confidence that can enhance the investment appeal of the market or company.
(With inputs from agencies)