Paytm, Nykaa May Enter MSCI Standard Index in Rebalancing: Nuvama

Potential Additions and Exclusions in MSCI Global Standard Index

According to a recent note by Nuvama Research, Paytm (One 97 Communications), Nykaa (FSN E-commerce Ventures), and Coromandel International are being projected for potential inclusion in the MSCI Global Standard Index during its upcoming rebalancing in May 2025. If these companies are added, they could bring substantial inflows to the Indian equity market. Coromandel International is expected to see an inflow of approximately $249 million, while Paytm and Nykaa could draw $216 million and $198 million, respectively.

Additionally, Thermax is expected to be excluded from the Standard Index, which could have a notable impact on investor positioning for this stock.

Highlights:

• Paytm and Nykaa are likely to join the MSCI Global Standard Index, bringing an estimated combined inflow of over $400 million.

• Coromandel International also projected for inclusion with an inflow of $249 million.

• Thermax expected to be removed from the Standard Index.

Smallcap Index Changes: New Entrants and Exits

The MSCI Smallcap Index is also expected to undergo significant changes. Nuvama forecasts 11 stocks could be added to the Smallcap index, including Tata Technologies, Hexaware, AWL Agri Business, International Gemological Institute (IGI), and Premier Energies. These additions are expected to generate inflows ranging from $12 million to $14 million each, with Tata Technologies and Hexaware leading the pack.

However, a few stocks are set to be excluded from the Smallcap index, including Allcargo Logistics, Rossari Biotech, Gujarat Alkalies, Orchid Pharma, and E2E Networks.

Highlights:

• Tata Technologies and Hexaware could see inflows of $12–14 million each following their addition to the MSCI Smallcap Index.

• Allcargo Logistics, Rossari Biotech, and others are expected to be removed from the Smallcap Index.

Impact on Market Sentiment and Investment Flows

The changes resulting from MSCI’s May rebalancing will likely affect stock market flows, particularly with the inclusion of prominent stocks like Paytm and Nykaa, which could attract substantial foreign institutional investment (FII). Investors will closely watch the final MSCI rebalancing announcement scheduled for May 14, with the flows expected to take effect on May 30, and index adjustments becoming official by June 3, 2025.

Highlights:

• MSCI’s rebalancing likely to trigger significant FII inflows.

• Market participants expected to track changes closely, especially the movement of Paytm and Nykaa.