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MSCI rebalancing adds Adani Energy, Lenskart and Groww to India index
The reshuffle takes effect for trades at the Monday close, with expected total passive inflows of about $1.516 billion into the four added stocks.
MSCI’s index reshuffle for India will shift portfolio weights and add new constituents, with changes taking effect from 1 September reflected in trades at Monday’s close, LiveMint Markets reports. The rebalancing is expected to bring a surge in trading volume and stock specific volatility, particularly near the end of the session.
LiveMint Markets, citing Reuters, said traders expect concentrated buying and selling to cause sharp price moves, especially in stocks with lower liquidity. The MSCI adjustment is also described as the first major test of India’s new closing auction session, a roughly 20 minute mechanism that matches buy and sell orders to set each stock’s official closing price, Reuters said.
Introduced on 3 August, India’s closing auction session replaced the prior method that set closing prices using the average trade price from the final 30 minutes of continuous trading, according to the report. The latest MSCI change will add four companies, Laurus Labs, Lenskart, Adani Energy Solutions and Groww, and remove Balkrishna Industries, SBI Cards and Astral.
The report also cites estimates from Nuvama Alternative and Quantitative Research for passive flows driven by the rebalancing. Laurus Labs is expected to see inflows of about $598 million, Lenskart about $352 million, Adani Energy Solutions about $310 million, and Groww about $256 million, for roughly $1.516 billion in total inflows from the additions. It also said the weight of Reliance Industries will be reduced, while Adani Enterprises’ weight will increase.