MSCI rejig brings Zomato, 6 other Indian stocks under investor lens

NEW DELHI: In its semi-annual review, the MSCI has reshuffled its Global Standard Indexes and added six new stocks to its list while increasing the weight of the new-age scrip Zomato.
The list of 6 additions includes ABB, Bajaj Holdings, India Hotels, Tube Investments, TVS Motors and Varun Beverages. MSCI has also increased the proforma weight of Zomato by 0.3%, which may lead to an inflow of around $30 million.

The changes will take place as of the close of November 30, which means they will come into effect from December 1.


Nuvama Alternative & Quantitative Research expects that the inclusion would lead to an inflow of $226 million for Tube Investments, $225 million for Indian Hotels, $204 million for Varun Beverages, $192 million for TVs, $144 million for Bajaj Holdings and $129 million for ABB.

What should investors do?
Nuvama noted that stocks tend to underperform after the rebalance, and it is a good time for long-term holders to trim some positions.

"The stocks largely languish or lower single-digit gains during the announcement date and from the announcement date to the adjustment date. On adjustment day, 52% of the time stocks have settled flat while 48% of the time they have closed in red indicating the higher rebalance volume is matched by the selling flow of hedge fund and event traders," it said while reviewing the impact of the last four semi-annual reviews by MSCI.

It has been noticed that 1-2 months after the rebalance, on average, 60% of the time stocks settled with losses. “Barring Adani Group stocks, most of the other inclusion names have traded in a narrow range up until six months post-rebalance,” Nuvama said.