Morgan Stanley Capital International (MSCI) is set to reveal the revised MSCI India Standard Index on August 12, leading to an influx of about Rs 30,214 crore into Indian stocks, as per a recent report. Laurus Labs and Biocon are likely candidates for inclusion in the new index, effective from August 31, according to JM Financial. The report suggests a high chance of Laurus Labs and Biocon transitioning from the MSCI India Small Cap Index to the MSCI India Standard Index, attracting additional investments from global passive funds and ETFs tracking MSCI benchmarks.
The report estimates potential inflows of approximately Rs 4,683 crore for Laurus Labs and nearly Rs 2,785 crore for Biocon. Apar Industries and Uno Minda are also identified as stocks with medium probabilities of being upgraded to the standard index, with expected inflows of Rs 2,464 crore and Rs 1,936 crore, respectively. Analysts note that the MSCI index rebalancing could have intensified volatility during the final 30 minutes of trading on the last day of May, contributing to a sharp late-session decline.
Market participants closely watch MSCI index reviews as alterations can trigger significant trading activity and passive fund movements around the implementation period. With foreign institutional investor (FII) outflows nearing $18 billion in 2025, India is underrepresented in many portfolios, potentially attracting selective inflows if sentiment towards emerging markets improves. Notably, 75% of the MSCI Emerging Markets index is dominated by four markets — China, India, Korea, and Taiwan.
In its market classification update released in June, MSCI categorized 23 countries and cities as developed markets, while 24 others, including South Korea, Taiwan, China, India, and Mexico, were classified as emerging markets.
