MSCI Rebalancing Kicks In Today, Triggering $1 Billion in Passive Flows

The rebalancing of the MSCI Global Index will take effect after the close of trading on February 28, potentially driving passive inflows of approximately $1 billion, according to estimates.

Stocks that have been added, removed, or experienced significant weight adjustments in the February 2025 review are expected to see heightened volatility during today's session.

Earlier this month, MSCI announced the inclusion of Hyundai Motor India Ltd. in the MSCI Global Standard Indexes, making it the only Indian large-cap stock added in this review. The company, which went public in November 2024, also recorded the highest weight increase among Indian securities. Meanwhile, Adani Green Energy Ltd. has been removed from the index.

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Among the stocks with the largest weight increases in the MSCI Standard Indexes, IndusInd Bank Ltd., Zomato Ltd., Varun Beverages Ltd., Mankind Pharma Ltd., Torrent Pharmaceuticals Ltd., Dixon Technologies (India) Ltd., PB Fintech Ltd., Adani Enterprises Ltd., and Voltas Ltd. joined Hyundai Motor India in the top ten.

IndusInd Bank is set to receive a higher weight in the MSCI index due to a decline in foreign portfolio investor (FPI) holdings. FPIs reduced their stake in the bank from 55.53% in September 2024 to 46.63% in December 2024, increasing the foreign headroom to 25%. Foreign headroom refers to the percentage of shares still available for foreign investors. If it crosses the 25% threshold, it indicates more shares are available for foreign institutional investors (FIIs) to purchase.

On the other hand, the largest weight reductions were observed in Adani Green Energy Ltd., Reliance Industries Ltd., HDFC Bank Ltd., Infosys Ltd., ICICI Bank Ltd., Bharti Airtel Ltd., Tata Consultancy Services Ltd., Mahindra & Mahindra Ltd., Larsen & Toubro Ltd., and Axis Bank Ltd.

Following these adjustments, HDFC Bank now holds the highest weightage among Indian stocks in MSCI indexes, followed by Reliance Industries, ICICI Bank, Infosys, and Bharti Airtel.

In the small-cap segment, MSCI added 19 Indian stocks and removed the same number. The top ten additions included:

• Jyoti CNC Automation Ltd.
• Ola Electric Mobility Ltd.
• CarTrade Tech Ltd.
• Afcons Infrastructure Ltd.
• TBO Tek Ltd.
• Websol Energy Systems Ltd.
• Zaggle Prepaid Ocean Services Ltd.
• Shaily Engineering Ltd.
• Kovai Medical Center & Hospital Ltd.
• Greaves Cotton Ltd.