Shares of state-owned entities Bharat Heavy Electricals (BHEL), Punjab National Bank (PNB), Union Bank of India, NMDC as well as GMR Airports Infrastructure witnessed mixed trend today after global index services provider Morgan Stanley Capital International (MSCI) announced its February 2024 restructuring. As part of it, these five stocks will be included in the MSCI, effective from February 29. Public sector lenders PNB and Union Bank will be added to Global Standard Indexes, while NMDC, GMR Airport, BHEL, PNB, and Union Bank will enter India standard indices.

Reacting to the news, PNB shares rose 3.7% to hit an intraday high of ₹122.60, while GMR Airports Infrastructure's share price climbed 6.5% to touch the day’s high of 91.13 on the BSE. On the other hand, BHEL shares fell as much as 3.9% to ₹207.80, and shares of Union Bank dropped 2.2% to ₹136.65 apiece. NMDC share price also declined as much as 3.65% to ₹224.10 apiece.

These five companies became eligible for the MSCI inclusion based on their stock performance in the last three months. These stocks rallied in the range of 25% to 55% in the past three months and are currently witnessing profit booking at higher levels.

Besides, MSCI has announced 27 additions from the small cap index, including Cello World, Cyient DLM, Mamaearth parent Honasa Consumer, Indian Renewable Energy, SpiceJet, and others. On the other hand, Barbeque Nation, GMT Airports Infra, Prestige Estates, Privi Speciality Chemicals, Rail Vikas Nigam (RVNL) and Torrent Power have been deleted from the MSCI Global Small Cap Index.

According to foreign brokerage Nuvama Alternative & Quantitative Research, the quarterly MSCI rejig will bring in passive foreign fund inflows of about $800 million to $1 billion into the Indian stock market. The agency expects foreign institutional investor (FII) passive inflows to cross $1.2 billion on February 29, when the adjustments will be made by funds, ETFs that benchmark against MSCI indices.

Overall, India’s weight in the MSCI Emerging Markets Index, which captures large and mid cap representation across 24 Emerging Markets (EM) countries, will reach historic high of 18.2% following the restructuring, from current level of 17.9%, says Abhilash Pagaria of Nuvama Alternative & Quantitative Research.  

MSCI Inc., a leading provider of critical decision support tools and services for the global investment community, on February 12 announced the results of the February 2024 index review for the MSCI equity indexes. The three largest additions to the MSCI Emerging Markets Index measured by full company market capitalisation will be Midea Group Co A (HK-C) (China), Punjab National Bank (India), and Union Bank of India (India).

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