Zomato among nine new stocks in MSCI India Index from December

The other new entrants will be SRF, Tata Power, Mindtree, Godrej Properties, IRCTC, Mphasis, Bharat Electronics and Bajaj Holdings. This follows the November semi-annual index review by global index services provider MSCI.

The changes will be implemented after the November 30 close. Analysts are expecting an inflow of about $1.4 billion from passive funds into these nine stocks. After the change, the count of Indian stocks in the MSCI Standard Index will increase to 108 from 101. The index provider has dropped two stocks-IPCA Laboratories and REC-from the MSCI India Index.

Shares of online food delivery and restaurant discovery platform, which could see an inflow of Rs 1,200 crore,
rallied 9% on Friday to close at a record high of Rs 153 apiece.

The inclusion of new-age technology firms in the big-league indices will help flows from long-term passive funds into listed Indian startups, said fund managers. “New-age digital companies may change the style of investing and investment philosophy,” Nilesh Shah, managing director at Kotak Mahindra Asset Management, said. “These companies will see more investor interest when they reach a certain size and scale. If these companies can exhibit a clear path of profitability, even long-term investors may come in.”

MSCI indices are widely tracked globally, with several passive funds replicating their portfolio in line with stock weightages. These funds have to buy or sell if a stock’s weight in the index is increased or reduced.

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According to an estimate by Edelweiss, Tata Power could see an inflow of Rs 1,800 crore, while SRF could result in passive fund purchases worth Rs 1,733 crore. Mindtree and IRCTC, which have rallied 117% and 142%, respectively, in the past six months, can see passive flows of Rs 1,500 crore and Rs 1,283 crore.

Bajaj Holding, IRCTC, and SRF gained nearly 2% each. REC shares declined by almost 3%. IPCA Laboratories, which has remained flat in the past six months, could see an outflow of a little over Rs 800 crore, while REC could see Rs 758 crore going out with the MSCI index rejig, according to the brokerage firm.

MSCI has also added 64 stocks to its MSCI India Domestic Small Cap Index, including Allcargo Logistics, ABB Power, Asahi India Glass, Mastek, NIIT, Chemplast Sanmar, Carborundum Universal, Nocil and Hikal, among others. At the same time, 10 stocks have been excluded from the MSCI India Small Cap Index list.