Mumbai: MSCI on Tuesday said it will implement changes in foreign ownership limits in the MSCI Global Indexes, which will contain Indian securities. It will implement the changes at the close of 30 November, effective 1 December.
Indian shares recouped earlier losses and were higher on Tuesday on hopes of higher inflows after MSCI’s announcement to rejig indices. Analysts believe that the changes are expected to rope in billions of dollars in domestic stocks where the foreign ownership limit will increase.
According to the Morgan Stanley report, Kotak Mahindra Bank, PI Industries and Ipca Laboratories are likely to be included into MSCI indices, leading to massive inflows to the tune of $2.5 billion via passive funds.
“MSCI India’s weight in MSCI EM will increase to 8.7% (weight increases for current constituents) and 8.8% (new additions) from the current level of 8.1%, and passive inflows of $1.93 billion and $600 million, respectively”, Morgan Stanley report added.
The biggest beneficiaies will be Asian Paints, Bajaj Finance, Britannia, L&T and Nestle India that can see inflows in the range of $100-$210 million. Apart from these Tech Mahindra, NTPC, Divi’s Labs, Cipla, Titan, Maruti Suzuki and Tata Steel may also see inflows of upwards of $77 million, according to the Morgan Stanley report. Kotak Mahindra Bank, PI Industries and Ipca Labs to see inflows of $502 million, $99 million and $102 million respectively.
Kotak Mahindra Bank surged 10% after this news. Other stocks were up in the range of 1-5%.
The MSCI move comes after depositories CDSL and NSDL in April increased foreign ownership limit for all listed companies to their sectoral limits.
“MSCI welcomes the recent disclosure of the foreign investment limits for Indian securities by National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL) addressing the concerns on the timeliness, quality and standardization of the data,” MSCI said in a statement.
Post the revision, the IT and Energy sector may see the biggest drop in weightage with 1.1% each reduction in MSCI indices. Financials may see 0.6% reduction while materials will see the biggest jump in weightage with 0.8%.