These changes, which will be effective as of market close on November 24, are expected to result in passive fund flows worth nearly $1.46 billion into the four stocks, according to Nuvama Alternative and Quantitative Research.
Index changes result in flows into these stocks because trillions of dollars in global passive funds shape their portfolios based on their benchmarks. When a stock is added or removed, index-linked ETFs and mutual funds are forced to buy or sell to mirror the index composition.
MSCI also made changes to its India Small Cap Index, adding six stocks while deleting 30.
Container Corporation of India and Tata Elxsi will be excluded from the Global Standard Index and added to the Small Cap Index.
ACC, Blue Jet Healthcare, Honeywell Automation India, and Leela Palaces Hotels & Resorts are among the rest of six stocks to be added to the small-cap index. Akums Drugs and Pharmaceuticals, Cyient DLM, Raymond, Raymond Realty and Neogen Chemicals are among the 30 deletions.Nuvama has estimated a total inflow of $82 million in these smallcap companies.The weights of Asian Paints, Apollo Hospitals, Lupin, SRF, Suzlon Energy, Yes Bank, Alkem Laboratories and Jubilant Foodworks are set to go up in the Global Standard Index. This would lead to inflows of $305 million, Nuvama said. The weights of Samvardhana Motherson, Dr Reddy’s Laboratories, REC, Zydus Lifesciences, Bharat Forge and Colgate Palmolive (India) will go down, which may lead to a combined outflow of $256 million from these stocks.