Global index provider MSCI has announced its February 2026 index review, triggering significant changes for Indian equities. The reshuffle is expected to lead to sizeable foreign inflows into select stocks, while others may face selling pressure as passive funds rebalance portfolios.
Global Standard Index: Who’s In, Who’s Out
In the latest review, Aditya Birla Capital and L&T Finance have been added to the MSCI Global Standard Index. Meanwhile, Indian Railway Catering and Tourism Corporation (IRCTC) has been removed from the index.
AU Small Finance Bank will continue to remain in the index, but its weightage has been increased following a reassessment of its free-float shareholding.
Despite these changes, India’s overall weight in the MSCI Standard Index remains unchanged at 14.1%. The number of Indian companies in the index will rise from 164 to 165.
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Estimated Investment Flows
According to market estimates, the likely foreign fund movements are as follows:
- Aditya Birla Capital: Approx. $257 million in expected inflows
- L&T Finance: Around $238 million in buying interest
- IRCTC: Estimated $142 million in outflows
- AU Small Finance Bank: About $172 million in additional inflows due to higher weightage
Since several global passive funds and ETFs track MSCI indices, they will be required to adjust their holdings in line with the revised composition. This could result in heightened trading activity and volatility in the affected stocks.
Significant Changes in the Small Cap Index
The MSCI Small Cap Index has also seen substantial reshuffling. The number of Indian stocks in the index will decline from 508 to 480. New additions from India include:
- Premier Energies
- National Securities Depository Limited (NSDL)
- Emcure Pharmaceuticals
- JSW Cement
- Ashapura Minechem
- Canara HSBC Life Insurance
- Thyrocare Technologies
Stocks removed from the Small Cap Index include:
- Gokaldas Exports,
- Sterlite Technologies,
- KNR Constructions,
- JKumar Infraprojects,
- VRL Logistics,
- Ashoka Buildcon,
- Anup Engineering,
- Chemplast Sanmar,
- Websol Energy Systems,
- Kaveri Seed Company,
- Zaggle Prepaid Ocean Services and
- Symphony Limited.
When Will the Changes Take Effect?
All revisions announced by MSCI will be implemented on February 27, 2026, during the final minutes of trading. This is typically when index-tracking funds execute bulk trades to align portfolios with the updated index structure, often leading to sharp price movements.
Why MSCI Matters
MSCI is a leading global index provider whose benchmarks are widely tracked by international institutional investors. Inclusion in an MSCI index generally increases a stock’s visibility and can attract foreign capital. Conversely, exclusion may trigger forced selling by funds that replicate the index.
Following the February review, select Indian stocks are expected to witness elevated activity. Market participants will now closely watch February 27, when the changes officially come into effect.
