India's Weight in MSCI EM Index to Potentially Cross 22% by Year-End
The recent market rally has significantly boosted India's weight in the MSCI EM Index. Analysts at Nuvama predict that India's weight could potentially cross the 22% mark by the end of 2024. This surge is attributed to the strong performance of the Indian stock market, with the S&P BSE Sensex and Nifty50 reaching all-time highs.
Nuvama expects significant inflows into several Indian companies as a result of the upcoming August and November rebalances. These include Dixon Technologies, Vodafone Idea, Oil India, Zydus Lifesciences, RVNL, Prestige Estates Project, and OFSS. However, Bandhan Bank is expected to see an outflow as it will be excluded from the MSCI Global Standard Index.
HDFC Bank, on the other hand, will experience a long-awaited weight increase. MSCI has made an exception by raising the weight with a lower adjustment factor, leading to an inflow of $1.8 billion. This increase will be implemented in two tranches, with the second and final tranche expected in November 2024.
Despite these adjustments, India's tentative weight in the EM Pack is expected to remain close to 20%. This will likely result in net FII passive inflow of $2.7 billion to $3 billion.