That apart, 30 Saudi Arabian securities will be added at half of their FIF-adjusted market capitalisation, representing an aggregate weight of 1.42 per cent in the MSCI Emerging Markets
Reports peg the outflow from Indian shores at around $700 million as a result of the MSCI Emerging Market index rejig.
However, analysts believe that the markets could take the rejig and the ensuing outflow in their stride if corporate results back home remain healthy and the ongoing general election outcome does not spring a surprise. These two events, they believe, could see domestic fund managers and abroad take a fresh investment call as regards India.
"MSCI rejig will impact exchange traded fund (ETF) flow, which is passive money. The other fund managers across the globe may still hold on to their positions if they feel that the underlying assets still hold promise. Elections and corporate results now hold key for fund flows into India. That said, between March and April 2019, we got flow to the tune of around $6 billion. Therefore, the projected outflow of $700 million is far less on a relative basis," said U R Bhat, managing director at Dalton Capital Advisors.
A recent Kotak Institutional Equities report tracking fund flows and assets under management (AUM) for India-dedicated funds in March 2019 at $47,869 million. Of this, ETF constituted $10,777 million, while the non-ETF segment stood at 37,092 million.
Vaibhav Sanghavi, co-chief executive officer, Avendus Capital Public Markets Alternate Strategies, too, believes that the outflow, if any, could be temporary and the markets now await clarity on outcome of the general elections for further direction.
“For me, the bigger event lies ahead of the MSCI rejig, that is the outcome of the ongoing general election that will set the tone for the overall market direction for the next few months. The MSCI rejig is a temporary phase that the markets need to cope with. Investors should not worry and should not read much into this,” he advises.