BHEL, PNB among likely MSCI inclusion candidates; Nykaa, Union Bank stocks in focus

Four stocks namely Oberoi Realty, Jindal Stainless Ltd, Punjab National Bank Ltd and Bharat Heavy Electricals Ltd (BHEL) may need to broadly maintain their prevailing price levels to enter MSCI Global Standard Index in the February review. If it happens, the four stocks may likely attract $567 million in passive inflows, Nuvama Alternative & Quantitative Research's latest note suggested.

According to Nuvama, shares of Union Bank India Ltd, FSN E-Commerce Ltd (Nykaa), Dalmia Bharat Ltd, Solar Industries Ltd and Alkem Laboratories Ltd are five stocks that may require 5-10 per cent rise over their last week's prices to enter MSCI Global Standard Index. In this case, the inflows may total $644 million, about $130 million each for the five stocks.

NMDC Ltd, Bosch Ltd, Canara Bank Ltd, NHPC Ltd and Prestige Estates are five stocks needing 15-18 per cent price appreciation for inclusion. Patanjali Foods, GMR Airports Infra and Torrent Power, on the other hand, would have an outside chances of making it to the index if they surge 30 per cent from the prevailing levels.

The global cut-off period spans from January 18 to January 31 and Nuvama expects the selection day to happen in initial few days of cut-off period itself. The official announcement, Nuvama said, is scheduled for February 12, with adjustments taking place on February 29.

"As we approach the global cut-off period for MSCI February 24 Rejig, we are reaffirming our top conviction picks for the Standard Index. I am bullish on most of the highlighted names and even if few names don’t make it in Feb then they will be probables for May 2024 review," said Abhilash Pagaria Head of Nuvama Alternative & Quantitative Research.

KPIT Technologies Ltd and Phoenix Mills Ltd are two stocks which could be under review while Indraprastha Gas Ltd and Petronet LNG are two other stocks that may see MSCI exclusion if they fall 3-20 per cent from the prevailing levels, Nuvama said.

Pagaria noted that India commands a 16.9 epr cent weight in the MSCI EM Index. With India's current momentum and outperformance compared to other emerging markets, he projected India's index representation to surpass 20 per cent by early to mid-2024.

"In 2023, India's stock count in the MSCI Standard index has risen to 131, with the inclusion of a net of 17 Indian stocks over the past four reviews. This marks an improvement from 2022, where only a net of 9 Indian stocks were included. The notable factors contributing to this increase in 2023 include India's substantial rally compared to other Emerging Markets and MSCI's shift from semi-annual to quarterly rebalancing for stock inclusions/exclusions," he noted.

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Also read: Stock recommendations by market analysts for December 12, 2023: Union Bank, West Coast Paper, GAIL and Jindal Steel