Meanwhile, India bulls Housing Finance and Glenmark Pharmaceuticals are the two stocks that could get excluded from the MSCI EM index
as their full and free-float market cap has fallen below the threshold set by MSCI. However, the outflows on account of these two exclusions could be a little over $100 million, forecasts Morgan Stanley.
Global index provider MSCI is due to announce its semiannual index review on November 8 and the changes will take effect from November 27.
During the previous reviews, India’s weight in the MSCI EM index
was pruned to provide for a higher weightage to so-called China-A shares (shares listed in mainland China).
Over the medium term, Morgan Stanley believes India’s weight could increase further if the government goes ahead with some of the proposed policy changes.
“The proposed Finance Minister's announcement to increase the minimum statutory limit for FPI investment in a company be increased from 24 per cent to the foreign investment limit of the sectors, has the potential to increase India's weight in MSCI EM by 81bps. We await a press note or circular from the government confirming these changes,” the brokerage said in a note.