18.2%! MSCI Emerging Markets Index India weight hits a new high, doubling in the past three years.
Analysis suggests that after the MSCI adjustment, there may be as much as $1.2 billion of passive foreign funds flowing into the India Standard and Small Cap Index.
According to media reports on Thursday, index provider MSCI will increase India's weight in the global standard (emerging markets) index by 0.34 percentage points to a historical high of 18.16% after the February review. This change will take effect after the close of trading on February 29th.
Since November 2020, India's weight in the index has almost doubled.
At the same time, MSCI added 5 Indian stocks to its global standard index without removing any stocks.
State-owned lending institutions Punjab National Bank and Union Bank of India have been included in the large-cap index, Bharat Heavy Electricals and NMDC have been included in the mid-cap index, and GMR Aviation Infrastructure has been transferred from the small-cap index to the mid-cap index.
According to research by Nuvama Alternative & Quantitative Research, after the February review, there may be passive foreign funds flowing into India's standard and small-cap indices, amounting to as much as $1.2 billion.
Nuvama stated in a report that this increase can be attributed to India's standardized foreign ownership limit in 2020, the continued rebound of the domestic stock market, and the relatively poor performance of other emerging markets. Nuvama added:
With the continued increase in domestic institutional investor flows and the stable participation of foreign securities investors, India's weight in the MSCI global standard index could exceed 20% by the second quarter of 2024.