In a big reshuffle of the MSCI India Index, global index provider MSCI said Nykaa (FSN E-Commerce Ventures), the fashion and beauty online retail giant, and Coromandel International, a fertilizer company, will join its elite index in the May 2025 review. The additions, effective at the close on May 30, 2025, are likely to result in huge investment inflows into the shares.
This addition to the MSCI India Index, which is one of the most important benchmarks for domestic as well as international investors considering the Indian equities market, tends to result in greater visibility and likely inflows from index-tracking passive funds.
Analysts expect substantial passive inflows for both companies, with estimates putting it around $199 million for Nykaa and $252 million for Coromandel International.
Interestingly enough, this review included no exclusions in the MSCI India Index, which was a net positive change for the index members. There were, however, notable movements within the MSCI Global Smallcap Index and the MSCI India Domestic Smallcap Index.
11 new stocks, including AWL Agri Business, ACME Solar Holdings, and Tata Technologies, will be included in the MSCI Global Smallcap Index, while 22 stocks, including outgoing Coromandel International, will be deleted. This is a broader reshuffle across market cap groups.
There will also be high turnover in the MSCI India Domestic Smallcap Index with 12 additions, including Hexaware Technologies and Godrej Agrovet, and 21 deletions, including Aarti Drugs and Prince Pipes and Fittings. These are a result of the dynamic nature of the Indian equity market and changing performance of different companies.
While Nykaa and Coromandel International are rejoicing at being included, One97 Communications, the parent entity of Paytm, was again left out of the MSCI indices, even though there were some market hopes of re-inclusion. The stock had been excluded from the index in May 2024.
The MSCI review also introduced the changes in the weightage of some of the current constituents of the MSCI India Index. Stocks such as Cipla, Indus Towers, UltraTech Cement, Grasim Industries, and Vodafone Idea will witness their index weightage going up, which could entice more investments. On the other hand, heavyweight stocks HDFC Bank, ICICI Bank, Infosys, and Bharti Airtel will bear a marginal fall in their weightage.
The addition of Nykaa and Coromandel International to the MSCI India Index reflects increasing dominance of the e-commerce and agribusiness industries in the Indian economy. These developments are followed with keen interest by investors across the world as they modify their portfolios according to the new index composition that will come into effect at the end of May.