HDFC’s MSCI Weightage Cut – Why and What Will Be the Impact
MSCI (Morgan Stanley Capital International) is known for its stock indices..it tracks the performance of stocks and also provides the base for exchange-traded funds. Its top incidence is the MSCI All Country World Index (ACWI), which tracks stocks in 23 developed and 24 emerging markets. Fund managers usually use the MSCI ACWI as a guide for asset allocation.
Apart from this, the benchmark is considered for the performance of global equity funds. So if the MSCI index moves too low, the stocks make an immediate difference. This weighting also holds a lot of meaning because global investors often look at this and invest and based on this, major inflow and outflow are made.
Unfortunately, Now MSCI indices mai merged HDFC’s weightage will not change from street expectation (1x) but will remain more or less as before (0.5x) – instead of an expected $3 billion inflow you will see an outflow of $150-200 million. As we have said before, MSCI weighting has a lot of impact on individual stocks…because global investors are tracking this…and according to weightage, FPIs get their money in and out.
Now after the merger, there was a lot of expectation from HDFC.
For instance, investors are feeling that MSCI weightage will increase..and it is obvious that as MSCI weightage will increase, FPIs will also lose their money..on this basis it is said that there could be an inflow of up to $3 billion. but Now the weightage of the MSCI index is not going to increase..toh ab street outflow is expected kar rahi hai Still working.
At present HDFC’s weightage is 6.74 percent, based on MSCI India Index and Pagaria preliminary calculations, the weightage of the merged entity could be slightly reduced to 6.5 percent. open percent low
By the way, HDFC MSCI Index may already be there but HDFC Bank is not there. Therefore, after the merger, HDFC Bank will also be considered, Everyone was taking 1x this adjustment factor – which would have doubled the market capitalization itself ..but now 0.5x adjustment is being done, which turns the whole game upside down.
So how will the finances of the bank be affected?
Well, the weights of the Musky Index and the financials of the bank are not interlinked…Now recently the bank has declared Q4 earnings where net profit has jumped 20% YoY…and total income has also increased by 31%….Performance and work-wise fitness will continue in the future also. Based on the fundamental and technical analysis of the bank…