MSCI rejig: Federal Bank, Indian Bank, NALCO, MCX added; Hyundai, Jubilant FoodWorks, Kalyan Jewellers, RVNL dropped

Global index provider MSCI has announced a fresh rejig of its ‘Global Standard Index’ as part of the latest semi-annual review announced on May 13. The changes in constituents for the MSCI Global Standard Indexes will take place as of the close of May 29, 2026.

MSCI said that Federal Bank , Indian Bank , Multi Commodity Exchange of India and National Aluminium Company will be added to its global standard index, while Hyundai Motor India , Jubilant FoodWorks , Kalyan Jewellers and Rail Vikas Nigam will be deleted from the indexes. 

Adani Energy Solutions to be excluded

The global index provider also notified that Adani Energy Solutions will not be added to its indexes as part of the latest review as the stock remains on the NSE’s short-term watchlist. Notably, the Adani group company was initially included among the additions in MSCI’s May 2026 review.

“According to Appendix I of the MSCI Global Investable Market Indexes Methodology book, during Index Reviews, MSCI will not implement any additions to IMI for securities that enter the India Short Term and Long Term Additional Surveillance Measure (ASM),” it said.

“The security will not be added to the MSCI Indexes as part of the May 2026 Index Review. Please note that the Index Review refreshed comparison reports published on May 12, 2026 already reflect this deletion,” it added.

Adani Energy Solutions has been placed under the long-term ASM Stage 1 (additional surveillance measure) framework after its trailing 12-month price-to-earnings (P/E) ratio remained above 50 for four consecutive quarters.

The ASM framework, introduced by Sebi and stock exchanges, is aimed at protecting retail investors from excessive speculation and sharp price swings in certain stocks. Inclusion under ASM Stage 1 serves as a surveillance and cautionary measure, and does not necessarily reflect any deterioration in the company’s fundamentals or financial health.

Passive fund flows to reshape stock movements

Apart from the additions and removals, MSCI has also revised the weightages of several existing constituents. Stocks such as Adani Power, BPCL, Nykaa, Trent and Oracle Financial Services are expected to see an increase in their index allocation, which could result in incremental inflows.

Following these adjustments, India’s overall representation in the MSCI Standard Index has remained largely unchanged. The country’s weight in the benchmark stands at 12.3%, marginally lower than the earlier 12.4%, while the total number of Indian companies in the index continues at 165.

According to Nuvama Alternative & Quantitative Research, the reshuffle is expected to generate sizeable inflows into the newly included stocks, as passive funds tracking MSCI benchmarks rebalance their portfolios. As per estimates, Federal Bank could attract the highest inflow of nearly $491 million, followed by MCX at $373 million, NALCO at $308 million and Indian Bank at around $209 million.

While the additions are likely to benefit select counters, several stocks have lost their place in the benchmark index. Among the outgoing names, Hyundai Motor India is expected to witness the steepest outflow of approximately $281 million. Jubilant FoodWorks could see outflows of around $161 million, while Kalyan Jewellers and RVNL may face selling pressure worth nearly $137 million and $136 million, respectively.

Nuvama estimates that Adani Power may receive inflows of around $54 million due to the higher weightage, while BPCL could attract approximately $41 million. Nykaa may see inflows of nearly $25 million, whereas Trent and Oracle Financial Services are expected to receive smaller passive allocations.

On the other hand, a number of heavyweight stocks are likely to face outflows following a reduction in their MSCI weightage. Hindustan Unilever and Bajaj Finance are expected to witness the largest selling pressure, with potential outflows exceeding $200 million each.

TCS, ONGC, UltraTech Cement, Infosys, Hindustan Aeronautics, Coal India, Mahindra & Mahindra and Nestle India are also among the major companies likely to see passive outflows ranging between $100 million and $145 million.

The review has also brought significant changes to the MSCI Smallcap Index. Kalyan Jewellers and Jubilant FoodWorks, which were removed from the Standard Index, will now become part of the smallcap benchmark. They will be joined by several other companies including Escorts Kubota, IREDA, Anthem Biosciences, Aditya Infotech, PhysicsWallah, Tenneco Clean Air, Fractal Analytics, Pine Labs, Jain Resource Recycling, Emmvee Photovoltaic, Bluestone Jewellery and Anupam Rasayan.

According to Nuvama Alternative, these inclusions in the Smallcap Index could lead to passive inflows ranging from $4 million to $25 million.

Meanwhile, MSCI has dropped several companies from the Smallcap Index, including GHCL, Electrosteel Castings, GMM Pfaudler, Sterling & Wilson, NIIT Learning Systems, Indigo Paints, Texmaco Rail and VIP Industries, among others.

The brokerage noted that continued weakness in the broader smallcap segment has led to a reduction in the total number of stocks in the MSCI Smallcap Index to 459 from 474 earlier.

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