MSCI may add Bank of Baroda, Adani Power, other stocks to India index in next review; $485 mn inflows likely As much as $485 million inflows could be coming towards five domestic stocks if they end up getting added to the MSCI (Morgan Stanley Capital International) indices in the upcoming Semi-Annual Index Review, analysts at Emkay Global said. In a recent report, Emkay Global said that Bank of Baroda, Tata Elxsi, NMDC, Adani Power, and AU Small Finance Bank could end up getting included in the MSCI India Standard Index. MSCI, the global index provider, rebalances its indices semi-annually and quarterly. The semi-annual index review is expected to be announced in the first half of May this year. Changes made in this review by MSCI will be effective from June. “We have assessed probable changes to the MSCI India Standard Index assuming the price cut-off date of April 18, 2022,” Emkay Global said. “This is an advance estimate of expected inclusions as the actual cut-off date for consideration would be any of the last 10 days of April 2022. We will release another update close to the announcement date,” they added. On the other hand, Adani Power is a low probability inclusion idea to the MSCI indices. If the stock is included, it may result in 0.37% weightage and $132 million in inflows. The stock has more than doubled this year and now trades at Rs 257 per share. “Adani Power ltd. lies on the border line of ‘extreme price increase’ threshold while fulfilling other criteria by a good margin, thus making it our low probability inclusion,” analysts said. Additionally, AU Small Finance Bank may also get added to the indices, but analysts see a low possibility of the same. If included the stock could have a 0.29% weightage and result in $104 million in inflows. Analysts at Emkay Global do not expect any exclusion from the standard indices in this review.
Logistics, good or bad, are driven by the states and the commerce ministry has a LEADS (Logistics Ease Across Different States) report, based on perceptions. The 2023 version was released in December. Since states are heterogenous, in the reporting, they are divided into four groups—coastal, landlocked, north-east, and UTs. States that do well are called achievers. Nomenclature matters. Thus, states that are middling aren’t called average. They are called fast movers. States that are sub-par are called aspirers. Let me highlight coastal states, since 75% of export cargo is estimated to originate from them. Among coastal states, ones that do well are Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu. The ones that lag are Goa, Odisha, and West Bengal. While India’s logistics performance may have improved over time, that’s not true of every state. Some have slipped. Most states have a state-level logistics policy, including Goa and Odisha. West Bengal, bottom of the pecking order in the coastal category, doesn’t have one. To quote from LEADS 2023, “Looking ahead, the State (West Bengal) could benefit from formulating a State Logistics Master Plan and State Logistics Policy to drive efficiency improvements and facilitate investments within the logistics sector and undertake consultation with the logistics stakeholders for educating and informing them about the initiatives State is undertaking for the development and improvement of logistics sector.”
Logistics has been talked about for a long time and India has also focused on improving performance. We are now getting some precise data on measurement and quantification. That helps.
Bibek Debroy, chairman, EAC-PM. Views are personal.