India second after China in global weightage as per MSCI

Bengaluru: Index provider MSCI raised India's weightage in its Global Standard index to an all-time high of 18.2 per cent on Tuesday, which could lead to inflows of about $1.2 billion, analysts said.

The rise, which comes after MSCI's February review, will come into effect after market close on Feb. 29.

India's weightage in the index has nearly doubled since November 2020. It is currently at 17.9 per cent.

The gain can be attributed to a sustained rally in domestic equities and relative underperformance of other emerging markets, especially China, Nuvama Alternative & Quantitative Research said in a note.

India has the second-highest weightage in the MSCI Global Standard index, after China.

Consistent flows from domestic institutional investors and steady foreign portfolio investor participation could lead to India surpassing a 20 per cent weight in the MSCI Global Standard index by early 2024, Nuvama added.

MSCI added five Indian stocks to its Global Standard index and did not move any out. In contrast, the index provider removed 66 Chinese stocks while adding five.

India's state-owned lenders Punjab National Bank and Union Bank of India were added to the large-cap index, while Bharat Heavy Electricals and NMDC were included in the mid-cap index. GMR Airports Infrastructure was moved to the mid-cap index from the small-cap one.

According to Nuvama, India could witness up to $1.2 billion of passive foreign flows after the February review.

Tata Motors and Macrotech Developers have been added to MSCI Domestic Indexes under the large-cap category while Punjab National Bank, Canara Bank and Embassy Office Park REIT have been added to mid-caps.

Bharat Heavy Electricals, Persistent Systems , MRF, Suzlon Energy and Cummins India were moved to the mid-cap index from the small-cap one.

About 27 small-cap stocks were added to MSCI Domestic Index, while six were either moved to other categories or removed.