MSCI Index rejig: Two Adani stocks, Indus Towers exit; Max Healthcare, HAL, Sona BLW included

Index provider Morgan Stanley Capital International on Thursday said that three stocks – hospital chain operator Max Healthcare, defence manufacturer Hindustan Aeronautics, and auto component maker Sona BLW Precision – have been added to its Indian Standard index, as part of its quarterly index review. Meanwhile, Adani Transmission, Adani Total Gas, and Indus Towers have been removed from the MSCI India Standard Index. The changes will be effective as of the close of May 31, 2023.

According to preliminary calculations done by Nuvama Alternative & Quantitative Research, the inclusion of Max Healthcare, Hindustan Aeronautics, and Sona BLW Precision into the Indian Standard index could lead to an inflow of $295 million, $195 million, and $175 million, respectively, for these three securities.

Meanwhile, Adani Transmission, Adani Total Gas and Indus Towers may see fund outflows of $201 million, $186 million and $84 million, respectively.

The investment research firm has also rejigged its MSCI India Domestic Small Cap Index as part of which 14 securities are to be added to the index and 8 are to be deleted. The stocks that have been included in the India Small Cap index are KFin Technologies, Kaynes Technology, Bikaji Foods, Fusion Micro Finance, Syrma SGS Technology, Religare Enterprises, NMDC Steel, ACE, Ujjivan Small Finance Bank, Maharashtra Seamless, RVNL, and IRCON.

On the other hand, Max Healthcare, Polycab India, Gillette India, Dhani Services, Radico Khaitan, Astec Lifescience, Dilip Buildcon, Thyrocare and PC Jewellers have been removed from the index.

The index provider also revealed that Kotak Mahindra Bank saw the biggest weight increase in the domestic index. The other stocks included in the list are Larsen & Toubro, Maruti Suzuki India, Ultratech Cement, Axis Bank, Oil & Natural Gas Corporation, NTPC, Power Grid Corporation of India, and Interglobe Aviation (IndiGo).

On the flip side, Reliance Industries, Infosys, ICICI Bank, JSW Steel, HDFC and Tata Consultancy Services are the stocks that will see their weight go down in the MSCI index.

Following MSCI quarterly index review, shares of Max Healthcare and Sona BLW Precision climbed up to 5% on inclusion in the Indian Standard index. On the other hand, Adani Transmission and Adani Total Gas plunged up to 5%, while Indus Towers shares skid over 2%.

The MSCI uses two methodologies to calculate MSCI Equity Indexes - the Price Adjustment Factor (PAF) or the Index Divisors. The MSCI Equity Indexes measure the performance of a set of equity securities over time using Laspeyres’ concept of a weighted arithmetic average together with the concept of chain-linking.