MSCI index changes likely to inflow $1.4b into stocks : How to invest?

MSCI index thumnail
Rate this post

What is MSCI global standard index?

MSCI global standard indexes are market cap-weighted indexes, that means that stocks are weighted in accordance to their market capitalization-calculated by using multiplying the stock price by using the total number of shares outstanding. Stocks with the largest market capitalization acquire the most weighting on the index. MSCI was formed when Morgan Stanley in 1986, Capital International Data Buy licensing rights. The firm is perhaps best known for its series of stock indexes, which are used as benchmarks by many mutual funds and ETFs. MSCI provides investment data and analysis services to investors.

CHANGES IN MSCI GLOBAL STANDARD INDEX:

Global index service provider MSCI has added eight Indian stocks and removed one Indian stock from its global benchmark index as part of the first quarter index review for the financial year 2023-24. But these changes can actually be seen on 31st August and activeness will be seen on 1st Sept. In the announcement by MSCI on Friday, the names of 8 Indian stocks, which are making their place in the MSCI Global Standard Index, are as follows: HDFC Asset Management, IDFC First Bank, Ashok Leyland, Astral, Cummins India Kirloskar, REC , Power Finance Corporation and Supreme Industries to its Global Standard Index and removed ACC.

Stocks with their inflow potential:

StockInflow potential
IDFC First Bank$204 Million
PFC$203 Million
Ashok Leyland$196 Million
REC Ltd$184 Million
Cummins India$173 Million
Supreme Industries$171 Million
Astral$170 Million
HDFC AMC$153 Million
Stocks with their inflow potential

Results of changes happening in MSCI:

Foreign passive funds are expected to inflow about $1.4 billion as a result of this change on August 31, when eight Indian stocks will be included in MSCI’s Global Standard Index. According to an estimate by IIFL Alternate Research, IDFC First Bank, Power Finance Corporation and Ashok Leyland are expected to see inflows of over $200 million each from passive funds, while $150 million to $190 million in the other five stocks. These changes will be visible when Fund rebalances its portfolio on 31st August. IIFL said the exclusion of ACC from the Global Standard Index could result in outflow of $98 million.

Read More……

Stocks and their returns:

IDFC First bank returns:

The stock has given a return of 183.9% in 3 years, while Nifty 100 has given a return of 69.67%. The stock generated 183.9% return as compared to Nifty Bank which gave 100.39% return to the investors over a period of 3 years.

PFC returns:

Stock gave a 3 year return of 188.11% as compared to Nifty 100 which has a return of 69.67%.

Ashok Leyland returns:

Stock gave a 3 year return of 246.8% as compared to Nifty 100 which gave a return of 69.67%. Stock generated 246.8% return as compared to Nifty Auto which gave investors 102.41% return over 3 year time period.

REC Ltd returns:

Stock gave a 3 year return of 175.76% as compared to Nifty 100 which has a return of 69.67%.

Cummins India returns:

Stock gave a 3 year return of 310.97% as compared to Nifty 100 which has a return of 69.67%.

Supreme Industries returns:

Stock gave a 3 year return of 230.06% as compared to Nifty 100 which has a return of 69.67%.

Astral returns:

Stock gave a 3 year return of 227.89% as compared to Nifty 100 which has a return of 69.67%.

HDFC AMC Returns:

Stock gave a 3 year return of 9.91% as compared to Nifty 100 which gave a return of 69.67%. Stock generated 9.91% return as compared to Nifty Financial Services which gave investors 80.33% return over 3 year time period.

MSCI Global Small cap Index:

MSCI added 40 stocks and dropped 11 to its Global Small cap Index. India has seen the largest increase in shares in the Global Small cap Index within the Asia-Pacific region.

Read More….

40 stocks to be added to MSCI Global Small cap Index:

ACC Ltd, Anand Rathi Wealth, Dreamfox Services, Five Star Business Finance, Glenmark Life Sciences, ICRA, Kalyan Jewelers and Marcussons Pharma are among the 40 stocks that will be part of the MSCI Global Small cap Index from August 31.

11 stocks to be removed from MSCI Global Small cap Index:

On August 31, Aditya Birla Capital, Ashok Leyland, Astral Limited, BEML Land Asset, Cummins India, IDFC First Bank, NIIT, Paisalo Digital, REC, Supreme Industries and Tata Communications will exit the Global Small cap Index.

1 important fundamental analysis to pick the right stock:

Balance Sheet :

Before investing in any stock it is necessary to see its balance sheet. In the balance sheet, you basically have to analyze sales, profit, assets, liabilities and cash flow etc. You have to see whether the company’s sales are increasing every year or not, whether the profit is increasing every year or not. How many Assets have been created and how much more or less are the liabilities and how much cash is available with the company to use etc.

Example ITC has sold a total of ₹ 72,917.34cr in the year 2023, while the total sale of 2022 has been ₹ 62,504.44cr, so there has been an increase in the sale. ITC has earned a net profit of ₹ 19724cr in the year 2023, while last year’s net profit has been ₹ 15,701, which means the profit has also increased. ITC’s total assets have increased by 11.16% in the year 2023 while in 2022 there was an increase of 4.66%. ITC’s total assets have increased by 13.21% in the year 2023 while there was an increase of 10% in the year 2022. There has been an increase in assets but there has also been an increase in liabilities which is a negative point. But if the total assets of the current year are more than the total liabilities of the current year, then it is also a positive point. ITC has a Net Cash Flow of ₹139.23cr which is an Average Cash Flow. The more cash flow the better.

FAQS:

How are stocks weighted in the MSCI Global Standard Index?

Stocks are weighted in the index based on their market capitalization, which is calculated by multiplying the stock price by the total number of shares outstanding. Stocks with larger market capitalization have a higher weighting in the index.

What triggers changes in the MSCI Global Standard Index?

Changes in the index are triggered by periodic reviews conducted by MSCI. These reviews consider factors like market capitalization changes, sector classification, and liquidity.

Are there any specific stocks being added or removed from the MSCI Global Small Cap Index?

Yes, MSCI has added 40 stocks and removed 11 stocks from its Global Small Cap Index. These changes are scheduled to take place on August 31.

Which Indian stocks are expected to receive the highest inflows from passive funds?

IDFC First Bank, Power Finance Corporation, and Ashok Leyland are expected to receive inflows of over $200 million each from passive funds, according to estimates.

How will these changes impact foreign passive funds?

Foreign passive funds are expected to see an inflow of about $1.4 billion due to the inclusion of these Indian stocks in the MSCI Global Standard Index.

What changes have been made in the MSCI Global Standard Index recently?

In the latest review, MSCI added eight Indian stocks to the index and removed one Indian stock. The changes will take effect on August 31, with active trading starting on September 1.

How does analyzing a company’s balance sheet help in making investment decisions?

Analyzing the balance sheet helps investors assess a company’s growth potential, financial stability, and risk profile. It provides valuable information for making informed investment decisions.

How can I pick the right stock using fundamental analysis?

Fundamental analysis involves studying a company’s financial statements, balance sheet, earnings, and other relevant factors to assess its value and growth potential. A healthy balance sheet is one crucial aspect to consider.

What is the importance of positive cash flow in a company’s balance sheet?

Positive cash flow indicates that a company is generating more cash than it’s spending. It’s a positive sign of financial health, as it suggests the company can cover its operating expenses and invest in growth.

Disclaimer:

Investing in stocks, particularly in small cap companies, carries inherent risks, including but not limited to market volatility, potential loss of capital, and unexpected market developments. Past performance is not indicative of future results, and investment decisions should be made after careful consideration of one’s individual financial situation, risk tolerance, and thorough research. By accessing and reading this content, you acknowledge and agree to the terms of this disclaimer.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top
5 large-cap stock ideas Escorts Limited A Mid Cap Stock : 197.72% Return Potential Hybrid Mutual Fund : which give you high returns at moderate risk 3 stocks of Nifty Smallcap 50: Giving high returns in the short term 5 Key Benefits of Investing In Cipla Stock Highlights for 5 large cap companies’ performance in Q1 FY2023-24 What is happening with Tata Power? is now the Time to Buy? FII stake is increase in 10 mid cap stocks : Chance to invest