MSCI August review may trigger USD 3.2 billion passive inflows into Indian equities: JM Financial

New Delhi [India], June 21 (ANI): India's equity markets could see net passive inflows of about USD 3.2 billion following the August 2026 review of the MSCI India Standard Index, according to a quantitative and alternative research report by JM Financial Institutional Securities.
The report said the MSCI India Standard Index rebalancing, one of the most closely watched events for global passive investors, could result in significant fund flows into Indian stocks when the changes take effect on August 31.
"On aggregate, the high-probability inclusions and exclusions could drive passive inflows into India of about USD 3.4bn and outflows of approximately USD 159mn, resulting in a net positive passive inflow of roughly USD 3.2bn," the report said.
The brokerage noted that the review assumes added importance as India's weight in the MSCI Emerging Markets Index has declined over the past two years.
"With India's weighting in the MSCI Emerging Markets Index decreasing drastically over the past two years, any incremental change (up or down) in the MSCI India Standard Index now carries meaningful flow implications," the report said.
The MSCI India Standard Index review announcement is scheduled for August 12, with the rebalancing expected to take effect from August 31.
According to the report, Ather Energy and Steel Authority of India Ltd (SAIL) are the leading candidates for inclusion in the MSCI India Standard Index. JM Financial identified both companies as medium-probability additions, saying they are "close to adequate free-float adjusted market cap above MSCI's minimum size threshold."
The report also highlighted potential upgrades from the MSCI Small Cap Index to the Standard Index. It said Laurus Labs and Biocon are "high-probability candidates to migrate to the MSCI India Standard Index from Small Cap Index at this review cycle."
"Both names have been identified for potential large-cap upgrades based on the recent surge in their market caps and liquidity metrics," the report added.
On the exclusion side, SBI Cards and Payment Services emerged as the only high-probability removal candidate.
"SBICARD screens as a high-probability removal," the report said, attributing the risk to "persistent deterioration in free-float market cap owing to fundamental pressures and structurally low free-float."
The report further noted that investors typically begin positioning ahead of MSCI reviews because index inclusions can lead to strong stock price performance.
"Historical evidence suggests 8-15 per cent cumulative excess returns in the 20 trading days preceding MSCI announcements for high-conviction inclusion candidates," it said. (ANI)