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Adani Power, Jindal Steel stocks likely to be added to MSCI indices in May, Reliance weightage to increase

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Adani Power, Jindal Steel & Power, and Tata Elxsi stocks are the most likely to be added to the MSCI indices in the upcoming semi-annual index review, Edelweiss Alternative & Quantitative Research said. Analysts believe the inclusion of the three stocks could result in a total inflow of $490 million. “Going by our past experience of analysing semi-annual reviews, we believe that the MSCI May 22 SAIR market cap cut-off date has already been selected in the previous week,” said Abhilash Pagaria of Edelweiss Alternative & Quantitative Research in a note. Meanwhile, Reliance Industries is expected to see an increase in its weightage on the indices. 

Jindal Steel & Power share price has rallied 36% so far this year and now trades at Rs 524 per share. The market capitalization of Jindal Steel & Power is Rs 53,544 crore. Adani Power shares have zoomed a massive 196% in 2022 and are now trading at Rs 299 per share. The market capitalization of Adani Power is Rs 1.15 lakh crore. Tata Elxsi shares have gained 27% this year, sitting at Rs 7,518 apiece and a market capitalization of Rs 46,872 crore. However, Tata Elxsi stock has seen heightened volatility recently, falling 16% in the last one month. “In our opinion, in few instances, the stock was at borderline of market-cap cut off levels,” Edelweiss said while discussing Tata Elxsi. 

The note highlighted that both Adani Power, and Jindal Steel & Power could see inflows worth $150 million each while Tata Elxsi, in addition, could attract $190 million in fund inflows. 

Analysts believe HDFC AMC could possibly be excluded from the MSCI indices but remains a borderline possibility. In the case of exclusion, there could be $85 million in fund outflows from the scrip. Indraprastha Gas was another stock that Edelweiss had earlier projected to be excluded, however, the scenario now looks unlikely. “As per our quarterly shareholding analysis, we believe there is a possibility of FIF increase in IGL and if that happens then the counter could be saved from getting excluded,” Edelweiss said. They added that if MSCI keeps the FIF status quo then Indraprastha Gas could see an outflow of $85 million.

For the review period MSCI picks any day between the last ten trading days of April Announcement of the index review is expected to be made public early morning of May 13 with rebalancing done on May 31. 

Apart from the inclusion and exclusion possibilities, Edelweiss said that Mukesh Ambani’s Reliance Industries Ltd (RIL) could see an increase in its weightage. “Post the conversion of partly paid-up shares to ordinary shares in November 2021, the domestic indices (Nifty 50 and BSE Sensex) have already made the adjustments and now we are expecting MSCI to take the same into account in the May Review,” they said. As much as $200 million in inflows could come toward RIL if its weight increases. 

Separately, Emkay Global Financial Services had predicted the entry of  Bank of Baroda, Tata Elxsi, NMDC, Adani Power, and AU Small Finance Bank to the MSCI indices. 

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