MSCI Index Stocks are the stocks that are a part of the MSCI India Index. You must be thinking that what is MSCI? Don’t worry I will explain to you everything about the MSCI and will share a list of the companies that are likely to be added to the MSCI index on 27th May 2021.
Before we go and check the list, let’s first understand what is MSCI Index? and why it is important to track the movement.
What is MSCI?
If I ask you what is the Indian equity market performance? You will surely go and check the Nifty performance. In India, Nifty and Sensex are the benchmark indexes that represent the Indian equity market performance. Same way, if I ask you what is the performance of the US equity market? You will probably go and check the Nasdaq performance. So in every country, there is an index that represents the equity market performance.
But if I ask you what is the performance of the overall emerging markets performance? How will you be able to find it? How can I know together, emerging markets are performing. What is the single point I can refer to for knowing the emerging market performance? That is what MSCI (Morgan Stanley Capital International) does.
It is an investment research firm providing data regarding the performance of emerging markets. It also provides investor-related services like research and analytical services to investors across the globe.
What is MSCI Index?
The MSCI index has companies from 26 emerging countries including India. The MSCI Index chooses the companies from these developing countries and will tell you how the developing country is performing in terms of the equity market. What is the growth rate of those developing countries and does the equity market of those developing countries is making some money or not?
MSCI was founded in 1986 to give information on investment research, services to investors. There are around 1.6 lakhs indices but not all are relevant or important. There are 4 major indices that people are tracking. These are:
- MSCI Emerging Market Index
- MSCI Frontire Market Index
- MSCI All country index
- MSCI EAFA Index
These indexes have different stocks listed in different countries. Like there is MSCI India Index wherein all the emerging companies of India will be listed. The foreign investor and institutional investors are keeping a track of these companies and choose the company from this list for investment. So these companies have the potential of becoming multi-bagger stocks in the near future.
As I mentioned above that there are 26 countries in the MSCI index. These all countries have different weightage based on their importance in the overall emerging market. Here are the country-wise weights.
Most of the companies in this index are from the large and mid-cap segments. This index doesn’t have companies from small-cap companies. There are few Indian companies listed in this index are Reliance Industries, Bajaj Finance, Larsen and Tubro, Maruti Suzuki, Divis Lab, etc.
MSCI Index Stocks Half Yearly Review
MSCI Index does the half-yearly review of the performance of the existing stocks and other companies which may get included in the index. Every six months, some companies will be removed and new companies will be added to the index. The selection of these companies will be based on various data points like the company’s financial performance, sustainability, profit of the company, dividend payout, and many more.
There is a half-yearly review of MSCI index stocks on 12th May 2021. In this review, there are some companies that will be added to the index. The probable list of the companies is as below.
|Adani Enterprises Ltd||High|
|Adani Transmission Ltd||High|
|Adani Total Gas Ltd||High|
|Jindal Steel & Power||Low|
According to Morgen Stanley, there would be around $1.6 billion of inflow in the Indian stock market is expected from this restructuring. As MSCI will make this change in the index, there would be a benefit to the companies that will be added to the index.
Should You Buy MSCI Index Stocks?
MSCI includes companies from the large and medium cap segment only. These companies generally have good financial track records and a strong market presence. Buying these stocks will be less risky as compared to other stocks as there is a lot of research done before they are included in the index. One can surely look at these stocks to be included in the portfolio. This is my personal view and not the investment advice. You may consult the financial advisor before making any purchase decision in these stocks. I personally do not hold any of the stocks as of today.