Swiggy, Mazagon Dock Among Four New Additions in MSCI Rejig; Inflows May Hit $850 Million

In the run‑up to MSCI’s August quarterly rebalancing, a clutch of high‑flying Indian stocks, led by Swiggy Ltd. and Mazagon Dock Shipbuilders Ltd., have emerged as strong contenders for inclusion in the MSCI India Standard Index. According to some analysts, these entries could attract estimated passive inflows totaling around $850 million and affirm India’s ascendancy in global passive fund allocations.

Why MSCI Matters

MSCI’s India Standard Index, covering approximately 85 % of the country’s investable large‑ and mid‑cap equity universe, serves as a bellwether for global passive funds and exchange‑traded funds benchmarked to the emerging‑markets index. Every quarter on 7 August, post‑market, the index is reconstituted, with changes effective from 27 August.

In the May 2025 rebalance, two Indian firms, Coromandel International and FSN E‑Commerce Ventures (Nykaa’s parent), were added to the MSCI Global Standard index, spurring inflows of between $216 million and $227 million and $172 million and $181 million, respectively. Meanwhile, in February, Hyundai Motor India was also included in MSCI’s Global Standard Index, with 20 small‑cap Indian firms added to MSCI’s domestic small‑cap index. These events underscore the broader significance of MSCI adjustments for India’s market capitalisation and global investment standing.

Market Dynamics and Valuation Implications

1. Swiggy has had a testing start to 2025. Despite the headwinds posed by competitors like Zomato and the new entrant Rapido (offering significantly lower commission rates), analysts note switching appetite among investors. A drop of around 33% year‑to‑date (as per Business Standard) has pushed Swiggy’s valuation towards more attractive levels. A successful MSCI inclusion could act as a catalyst, boosting sentiment and delivering USD‑denominated inflows that boost rupee returns.

2. Mazagon Dock exemplifies India’s strategic pivot towards defence and naval capacity, partly influenced by heightened regional geopolitical risks. Its surge of approximately 40% in 2025, followed by a retracement, reflects investor caution amid government contract timelines and potential delays.

3. Hitachi Energy taps into India’s large-scale renewables drive and transmission modernization, themes that have gained traction among sustainability-focused fund managers. Its share price has gained 23% YTD, buoyed by expectations of capacity expansion under the National Electricity Plan.

4. Waaree Energies, although still facing uncertainty regarding inclusion, remains noteworthy. With solar-glass and module manufacturing capacity ramping up, it serves as a proxy for India’s green transition. Its +5% rise in the last month suggests stability ahead of MSCI’s verdict.

Investor Perspectives

Passive fund managers and global investors routinely monitor MSCI rebalancing schedules. The expected $850 million inflow is significant, representing nearly three times the average daily traded value for Swiggy alone (~3.4 times the average daily volume, or ADV). However, transfer timing matters, as price impact occurs during the rebalance window when funds construct positions based on index weightage.

To illustrate, if MSCI assigns Swiggy a 3% weight in the index, a fund tracking this composition would buy accordingly on the effective date. Sudden volume surges can thus cause share prices to move sharply, as seen during the May inclusion of Nykaa and Coromandel, which also delivered fresh inflows into mid-cap budgets.

Yet, the inclusion probability varies. While Swiggy appears almost certain, Waaree’s lower ranking suggests a market expectation of partial rather than full purchase flows. Analysts caution that “medium‑probability” stocks may see less aggressive buying.

Macro and Structural Context

The timing aligns with India’s increasing weight in MSCI’s Global Emerging Markets index, which reached approximately 19.4% in May, up from 19% in February, reflecting a broader shift towards India amid geopolitical volatility elsewhere. Moreover, 85% coverage in the Standard Index means that both mid-cap and large-cap firms stand to benefit from MSCI ledger changes.

Emerging-market ETF issuers closely monitor rebalance announcements like this one. Fund inflows, although labeled “passive,” still drive capital to specific names, providing discretionary liquidity based on index rules. Consequently, MSCI’s August move could yield a bidding rush for inclusion candidates, temporarily skewing valuations. Investors may then rotate into cyclicals or other mid-cap stocks.

Looking Ahead

• 7 August 2025: MSCI announces the composition change post‑market.
• 27 August 2025: Changes take effect at market opening.
• Investor focus: While Swiggy’s fate appears decided, attention also centres on Mazagon Dock and Hitachi Energy, both of which may become mainstays in passive‑fund portfolios.
• Premium effect: Stocks gaining entry often undergo overbought phases before settling; active investors may seize opportunities to book profits post‑inclusion, while patient holders could benefit from incremental global demand.

Risks and Uncertainties

Despite expectations, MSCI composition remains probabilistic. Swiggy may yet fall short if market capitalisation or free float metrics shift before cut‑off dates. Broader market volatility, whether driven by global monetary tightening or regional geopolitical tensions, could also dissuade passive purchases.

Furthermore, inclusion may prompt swift rallies but be followed by “sell‑the‑rally” episodes. Institutional investors often take profits once index‑tracking funds have completed accumulation. Active investors eyeing mid-caps might see this as an opportunity but are cautious about sustained growth due to valuation concerns.

Conclusion

June’s MSCI preview heralds a meaningful infusion of $850 million in passive capital into the Indian equity market, centered on a quartet of stocks representing food tech, defense, energy, and renewables. This underscores India’s increasingly pivotal role in global index construction and emerging‑market investment flows.

Should MSCI deliver as anticipated in August, September may mark a new phase of rising stability in India’s mid‑cap segment. Still, investors are watching closely, not simply for inclusion, but for sector rotation that follows. MSCI’s August rebalance may thus offer both opportunity and caution: a reminder that index‑driven inflows are robust but also directional and time‑sensitive.