MSCI's May 2026 index rejig has kept India's overall representation in the MSCI Standard Index unchanged at 165 stocks, despite significant churn in individual constituents. According to Business Standard, the changes will take effect after market close on May 29, 2026. The index additions include Multi-Commodity Exchange of India (MCX), Indian Bank, Federal Bank, and National Aluminium Company (Nalco), while four companies - Rail Vikas Nigam Limited (RVNL), Kalyan Jewellers, Hyundai Motor India, and Jubilant FoodWorks - have been removed from the Standard Index. Notably, Adani Energy Solutions has been excluded from inclusion in the May 2026 review after remaining under the National Stock Exchange's Short-Term Additional Surveillance Measure (ASM) framework for unusual trading activity. As per Business Standard, MSCI confirmed that securities placed under India's Short-Term or Long-Term Additional Surveillance Measure lists are not eligible for inclusion in the Investable Market Index under its methodology.
Four stocks are expected to attract substantial passive inflows following their MSCI Global Standard Index inclusion, with Federal Bank Ltd leading at $491 million, Indian Bank at $373 million, MCX at $308 million, and Nalco at $308 million in inflows. According to Nuvama Alternative and Quantitative Research, these are among the four stocks added to the Global Standard Index, along with Adani Energy Solutions Ltd and Hitachi Energy India Ltd. Conversely, Hyundai Motor India, Kalyan Jewellers, RVNL, and Jubilant FoodWorks are expected to see outflows of $281 million, $161 million, $136 million, and $136 million respectively on index exclusion. Additionally, Adani Power Ltd, Trent Ltd, and BPCL may see inflows of $54 million, $41 million, and $25 million respectively due to weight increases, while Hindustan Unilever Ltd, Bajaj Finance, and TCS are expected to see outflows of $204 million, $109 million, and $109 million respectively. The total estimated inflows and outflows amount to approximately $1.38 billion across all affected stocks, as reported by Nuvama Alternative and Quantitative Research.
MSCI has carried out a major clean-up in the Small Cap index, where 14 stocks were added and 29 stocks excluded in the May 2026 review. According to Business Standard, new inclusions include Aditya Infotech, Anthem Biosciences, Anupam Rasayan India, Bluestone Jewellery and Lifestyle, Emmvee Photovoltaic, Escorts Kubota, Fractal Analytics, Indian Renewable Energy, Jain Resource Recycling, Jubilant FoodWorks, Kalyan Jewellers India, PhysicsWallah, Pine Labs, and Tenneco Clean Air India, while exclusions are Alok Industries, Bajaj Electricals, Blue Jet Healthcare, CE Info Systems, Cello World, Federal Bank, GMM Pfaudler, and others. The stock count in the small-cap universe will reduce from 474 to 459 post-rejig, reflecting sustained pressure on small-cap names and MSCI's simultaneous implementation of changes to its float calculation methodology.
India's weight in the MSCI Standard Index will remain largely stable at 12.3% versus 12.4% earlier, despite the churn in individual names. As reported by Nuvama Alternative and Quantitative Research, the index changes are "broadly in line" with earlier predictions, indicating limited surprise for passive flows at the aggregate level. MSCI has increased the weightage of stocks such as Adani Power, Bharat Petroleum Corporation, FSN E-Commerce Ventures, Oracle Financial Services Software, and Trent within the MSCI Standard Index, while around 75 companies will see lower weightage after the review, including Bajaj Finance, Coal India, Hindustan Unilever, Infosys, Oil and Natural Gas Corporation, Tata Consultancy Services, UltraTech Cement, Hindustan Aeronautics, Mahindra & Mahindra, and Nestle India. The exclusion of Adani Energy Solutions from the review reflects MSCI's policy under Appendix I of the MSCI Global Investable Market Indexes Methodology, which states that "securities under the Short-Term or Long-Term Additional Surveillance Measure (ASM) will not be added to its Investable Market Indexes during periodic reviews." The inclusion of MCX and Indian Bank positions them to attract incremental foreign passive inflows as global funds realign portfolios to the new MSCI composition, while stocks moving out could trigger passive selling as index trackers adjust holdings post-rejig.
