MSCI reshuffles India's Global Standard Index with two new finance entries
MSCI's latest quarterly review will bring changes to its Global Standard Index for India. Two new companies, Aditya Birla Capital and L&T Finance, will join the benchmark, while one existing member, Indian Railway Catering and Tourism Corporation (IRCTC), faces removal. The adjustments, set to take effect on February 27, will require ETFs tracking the index to rebalance their holdings.
The reshuffle includes the addition of Aditya Birla Capital and L&T Finance, alongside an increased weighting for AU Small Finance Bank. Meanwhile, IRCTC will exit the index, potentially triggering significant fund movements.
The upcoming changes follow MSCI's standard criteria, which assess market capitalisation, free float, and liquidity. Aditya Birla Capital and L&T Finance have both seen strong growth over the past two years. Aditya Birla Capital's market value rose from around ₹45,000 crore in February 2024 to ₹75,000 crore by February 2026, while L&T Finance expanded from ₹40,000 crore to ₹65,000 crore in the same period. Their inclusion reflects improved free float (exceeding 50%), robust liquidity, and compliance with MSCI's profitability and governance standards.
Analysts estimate the additions could attract passive inflows of approximately $257 million for Aditya Birla Capital and $238 million for L&T Finance. Conversely, IRCTC's removal may lead to outflows of about $142 million as passive funds adjust their portfolios. AU Small Finance Bank, already part of the index, will see its weighting increase, though India's overall representation in the MSCI Standard Index remains steady at 14.1%.
The rebalancing will be finalised at market close on February 27. ETFs tracking the index will then buy or sell shares to align with the updated composition, ensuring their holdings match the revised benchmark.
The adjustments will take effect after trading ends on February 27, prompting fund managers to reallocate investments. Aditya Birla Capital and L&T Finance are expected to benefit from fresh inflows, while IRCTC may see selling pressure. India's overall share in the MSCI index, however, will stay unchanged at 14.1%.
