SEO Title: MSCI May 2025 Rebalancing: Coromandel and Nykaa Added to Standard Index; Paytm Misses Out

MSCI May 2025 Rebalancing: Coromandel and Nykaa Added to Standard Index; Paytm Misses Out

Index Rejig to Trigger Nearly $450 Million in Inflows for Newly Added Stocks; Changes Effective May 30

Global index provider MSCI has announced its May 2025 rebalancing for Indian indices, with Murugappa Group's Coromandel International Ltd. and FSN E-commerce Ventures (parent company of Nykaa) being added to the prestigious MSCI India Index, which is part of the MSCI Global Standard Index. The changes, announced early Wednesday, May 14, will be implemented at the close of trading on May 30, 2025.

Key Additions and Exclusions

The semi-annual review of the MSCI indices resulted in two additions to the Standard Index while no stocks were removed. Besides the changes to the main index, MSCI also announced modifications to its other indices:

• No deletions from the MSCI India Standard Index
• 12 new additions to the MSCI India Domestic Smallcap Index
• 21 stocks removed from the Smallcap Index
• GMR Airports added to the MSCI India Domestic Index
• Sona BLW Precision Forgings excluded from the India Domestic Index but added to the Smallcap Index

Contrary to market expectations, One97 Communications (Paytm's parent company) was not included in any of the MSCI indices. Many analysts had anticipated Paytm's return to the index after being dropped in May 2024, but the stock failed to make the cut in this rebalancing cycle.

Expected Fund Flows

According to estimates from Nuvama Alternative & Quantitative Research, the index changes will trigger significant passive fund flows:

• Coromandel International is expected to attract inflows of approximately $252 million
• Nykaa (FSN E-commerce) should see inflows around $199 million

Several existing index constituents will also experience changes in their weightage. Companies including Cipla, Indus Towers, UltraTech, Grasim, and Vodafone Idea will see an increase in their representation in the MSCI Standard Index, potentially resulting in additional inflows of up to $50 million.

Conversely, heavyweights such as HDFC Bank, ICICI Bank, Infosys, and Bharti Airtel will experience a reduction in their weightage within the index.

Smallcap Index Adjustments

The MSCI India Domestic Smallcap Index will undergo more extensive changes with multiple additions and deletions:

Key additions to the Smallcap index include:

• Godrej Agrovet
• Hexaware Technologies
• Premier Energies
• Sona BLW Precision Forgings (moved from the Domestic Index)

Notable exclusions from the Smallcap index include:

• Aarti Drugs
• Prince Pipes
• Orchid Pharma
• 17 other companies

Stock Performance of New Entrants

Coromandel International, one of the new entrants to the Standard Index, has demonstrated strong market performance in recent periods. The stock has appreciated by 10% in the last month and has gained 25% since the beginning of 2025. Long-term investors in the company have been handsomely rewarded, with the stock nearly quadrupling in value over the past five years, posting gains of 283% during this period.

The inclusion in the MSCI index is likely to further boost investor interest in both Coromandel International and Nykaa, as passive funds tracking the index will need to add these stocks to their portfolios by the end of May.

Market Implications

MSCI index inclusions and exclusions are closely watched by market participants due to their significant impact on stock prices. Stocks added to major indices typically experience increased demand from passive funds that automatically track these indices, often resulting in price appreciation.

For Coromandel International and Nykaa, the inclusion in the MSCI Standard Index represents an important milestone that may enhance their visibility among global investors and potentially improve their trading liquidity. The additional inflows of approximately $450 million combined for both stocks could provide substantial support to their market performance in the near term.

Meanwhile, Paytm's failure to regain its position in the index may disappoint investors who had anticipated its inclusion based on analyst predictions. The company, which was removed from the index in May 2024, will need to continue improving its fundamentals and market performance to be considered in future rebalancing exercises.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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India's Inflation Drops to 3.16% in April - Lowest Level Since July 2019

Third Consecutive Month Below RBI's 4% Target; Sets Stage for Potential Interest Rate Cut in June

India's retail inflation continued its downward trend in April 2025, reaching its lowest level in nearly six years. This persistent moderation in price pressures strengthens the case for further monetary policy easing, potentially benefiting borrowers and supporting economic growth in the upcoming months.

The latest data released on May 13 shows that annual retail inflation slowed to 3.16% in April, down from 3.34% in March. This marks the lowest inflation rate since July 2019 and represents the third consecutive month where inflation has remained below the Reserve Bank of India's (RBI) medium-term target of 4%.

Food Inflation Continues to Ease

A significant factor driving the overall moderation in inflation has been the continued slowdown in food prices, which account for nearly half of the typical Indian consumption basket. Food inflation decelerated to 1.78% in April, down from 2.69% in March, reaching its lowest level since October 2021.

The downward trend in vegetable prices has been particularly notable, with prices falling by 11% year-on-year in April, compared to a 7.04% decline in March. This substantial decrease in vegetable costs has provided welcome relief to household budgets across the country.

Other key food categories also showed moderation:

• Cereals inflation eased to 5.35% in April from 5.93% in March
• Pulses prices declined by 5.23% compared to a 2.73% fall in March

Core Inflation Remains Stable

Core inflation, which excludes volatile food and energy prices and is considered a better indicator of underlying price pressures in the economy, remained relatively stable. According to economists' estimates, core inflation held steady at approximately 4%-4.1% in April, virtually unchanged from the 4.1% recorded in March.

This stability in core inflation suggests that while food prices have been driving the headline inflation lower, the broader inflationary environment remains anchored around the RBI's target level.

Implications for Monetary Policy

The continued moderation in inflation opens up room for further monetary policy easing by the Reserve Bank of India. In April, the central bank had already reduced its key policy rate for the second consecutive time and signaled a more accommodative stance going forward.

"The CPI (consumer price index) print today sets the stage for another rate cut by the RBI in its June policy of 25 basis points," said Sakshi Gupta, an economist at HDFC Bank.

The RBI has recently revised its growth and inflation projections for the current fiscal year. It lowered its GDP growth estimate to 6.5% from 6.7% and adjusted its inflation forecast to 4% from 4.2% previously.

Outlook for Coming Months

Economists remain optimistic about the inflation trajectory in the near term, particularly with expectations of normal monsoon rainfall, which typically helps moderate food prices further.

"We expect the retail inflation to remain in the range of 3.6% to 3.8% during April-June period on the expectations of a normal monsoon," noted Rajni Thakur, an economist at L&T Finance.

If inflation continues to remain below the 4% target, the RBI would have greater flexibility to focus on supporting economic growth through lower interest rates. This could potentially benefit various sectors of the economy, including real estate, automobiles, and consumer durables, where demand is sensitive to borrowing costs.

Market Implications

For investors and market participants, the sustained moderation in inflation and the prospect of further rate cuts present several implications:

• Bond markets may see yields trending lower, leading to potential capital gains for existing bondholders
• Rate-sensitive sectors on the stock market could potentially outperform as borrowing costs decline
• Real estate investments may become more attractive with reduced home loan interest rates
• Banks and financial institutions might see changes in their net interest margins as the rate cycle turns

As India navigates through global economic uncertainties, the combination of moderate inflation and accommodative monetary policy provides a favorable backdrop for sustaining economic momentum in the world's fifth-largest economy.

Disclaimer: The views and investment tips expressed in this article are for informational purposes only and do not represent financial advice. The views expressed are those of the sources cited and not necessarily those of this website or its management. Investing in equities or other financial instruments carries the risk of financial loss. Readers must exercise due caution and conduct their own research before making any investment decisions. We are not liable for any losses incurred as a result of decisions made based on this article. Please consult a qualified financial advisor before making any investment.

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