MSCI Standard Index could see the inclusion of SRF, Mindtree, IRCTC, Zomato and two other stocks in the upcoming November semi-annual index rebalancing, Edelweiss Alternative Research stated. Analysts think the inclusion of six scrips to the index could outcome in inflows worth $1.04 billion from foreign investors into these stocks. Morgan Stanley Capital International (MSCI), the international index provider, rebalances its indices semi-annually and quarterly. The semi-annual index overview is anticipated to be announced in November this year with a reduce-off date being the last week of October.
“We (Edelweiss Alternative Research) have been flagging off names (SRF, MPHASIS, MINDTREE, IRCTC & ZOMATO) since early September and all of these names along with a new addition (Godrej Prop) remains our high conviction inclusion for MSCI Standard Index for November Rebalance. If all the stocks make the cut then cumulatively, they will see inflows of $1 billion+,” stated Abhilash Pagaria of Edelweiss Alternative Research.
Over $1 billion inflows anticipated
The brokerage firm believes SRF could be the biggest beneficiary of inflows, with $245 million funds anticipated to come in favour of the chemical enterprise. SRF is anticipated to have a weightage of .45% in the index. The second-biggest fund inflows could be in favour of Mindtree. With .36% weightage, the IT enterprise is anticipated to see $200 million worth of inflows. Mphasis is pegged as the third-biggest recipient of inflows at $196 million. Further, analysts at Edelweiss estimate that Godrej Properties could attract $177 million from foreign funds.
State-owned IRCTC could see $170 million of inflows, followed by $156 million in favour of newly listed Zomato. However, Edelweiss highlighted that though these two stocks qualify for inclusion in the MSCI Standard Index any meaningful decline from present levels till the reduce-off date in October could hamper their possibilities.
Technology sector weightage to surge
Edelweiss expects the weight of the technologies sector in the MSCI Standard Index (India) to go up if the stated stocks are incorporated in the next rebalancing. “As per our assessment, out of the six inclusions, the top four names are from the technology pack. In case all the high conviction names get included, then the weight of the technology sector in MSCI Standard Index (India) can approximately rise from 18.2% to 19.5% by November 30, 2021,” they added.
With more new-age tech firms anticipated to list on domestic bourses in the close to future, Edelweiss believes that the technologies sector’s weight could continue to move up. “After the listing of digital IPOs and once the lock-in period for pre-IPO investors come to an end , all the newly added names in Index from upcoming listings will see higher free float which will simultaneously lead to increase in the weightages of those stocks in the Index,” they added.