Candidates such as NMDC, PNB, and BHEL are strong contenders for inclusion in the MSCI Global Standard Index, says Nuvama

Top companies like NMDC, Punjab National Bank (PNB), BHEL, and Union Bank of India may be included in MSCI Global Standard Index after the February review, which could result in significant inflow into these stocks, as per the predictions of Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research.

In addition to these four companies, NHPC and Jindal Stainless may also be included in the MSCI Global Standard Index, according to Pagaria, resulting in significant inflow for each of these companies.

Furthermore, IREDA, Cello World, Honasa Consumer, Jaiprakash Associates, and RR Kabel are potential inclusions in the MSCI Smallcap Index post-February review. Yet, companies like Prestige Estates, GMR Airports, Rail Vikas Nigam, and Privi Speciality could face exclusion from the MSCI Smallcap Index after the February 2024 review.

Overall, India is expected to see an inflow of close to $800 million to $1 billion in FII passive inflow, with PSUs leading the inclusions in the February review, according to Nuvama Alternative & Quantitative Research.

The announcement for the February 2024 rejig is scheduled to be made by MSCI on Tuesday, February 13, around 3:30 am IST, with the adjustment taking place on February 29, 2024. It is anticipated that India’s representation in the MSCI EM pack will move to around 18.5% following the February rejig.

In terms of India’s performance, there has been an increase in the stock count in the MSCI Standard index, with the inclusion of a net of 17 Indian stocks over the past four reviews. This is attributed to India’s substantial rally compared to other Emerging Markets and MSCI’s shift from semi-annual to quarterly rebalancing for stock inclusions/exclusions.

The improved representation of India in the MSCI EM Index is due to the standardized Foreign Ownership Limit (FOL) in 2020, robust performance by Indian equities, relative underperformance by other EM packs, and the shift in MSCI’s rebalancing methodology. With the prospect of steady FII participation, it is expected that India could surpass a 20% weight in the MSCI EM Index by early 2024.

It is important to note that the predictions and recommendations mentioned above are based on the calculations of individual analysts and experts. Therefore, investors are advised to consult with certified experts before making any investment decisions.