The MSCI Global Standard Index update for May 2025 has brought positive news for Coromandel International Ltd., part of the Murugappa Group, and FSN E-Commerce Ventures Ltd., the parent company of Nykaa, as both companies are set to be included in the MSCI India Index. This development, confirmed by global index provider MSCI, is scheduled to take effect after market close on May 30, 2025.

Let’s dive deeper into what this means for the companies involved, the expected market inflows, and the wider changes across other MSCI indices, including additions and deletions in the MSCI India Domestic Smallcap Index.

Big Winners: Coromandel International and Nykaa

The inclusion of Coromandel International and Nykaa into the MSCI India Index is a significant milestone for both companies, indicating strong market performance, investor confidence, and improved stock liquidity.

• Coromandel International is likely to witness passive inflows of approximately $252 million, according to Nuvama Alternative & Quantitative Research.

• Nykaa (FSN E-Commerce Ventures) is expected to benefit from passive inflows to the tune of $199 million.

These inflows are largely due to global funds that track the MSCI indices, which will be required to adjust their holdings to include these newly added stocks.

Both companies have been performing steadily in recent months:

• Coromandel International’s stock has surged 10% over the past month, and is up 25% in 2025. Over a five-year span, the stock has gained 283%, showing consistent long-term growth.

No Exits From MSCI India Index

While additions like Coromandel and Nykaa are making headlines, MSCI also clarified that there will be no deletions from the MSCI India Index in this update.

This stability is being seen as a positive sign for Indian equities, as it suggests a broad base of consistent performers in the current index.

Paytm Left Out Again

Interestingly, One97 Communications, the parent company of Paytm, has not made it back into the MSCI index, despite prior expectations from analysts.

• Paytm was previously dropped in May 2024, and many speculated a return in this round due to stock price stabilization and improving business fundamentals.

• However, MSCI did not include Paytm in the latest reshuffle, indicating either insufficient free-float market capitalization or other eligibility criteria not being met.

This is seen as a setback for Paytm, particularly when peers like Nykaa are gaining international visibility through MSCI inclusion.

GMR Airports Joins India Domestic Index

Apart from the main index, GMR Airports Infrastructure Ltd. will now be part of the MSCI India Domestic Index. This move could improve visibility and attract investor interest in the infrastructure and airport operations space.

Sona BLW Excluded from India Domestic Index

Sona BLW Precision Forgings Ltd., a key player in the auto components sector, has been excluded from the MSCI India Domestic Index. However, it will now feature in the MSCI India Domestic Smallcap Index, which implies a downgrade in institutional visibility but not a total exclusion from MSCI’s watchlist.

Major Overhaul in Smallcap Index

In a major shuffle, the MSCI India Domestic Smallcap Index saw:

• 12 new inclusions, including:

  • Godrej Agrovet

  • Hexaware Technologies

  • Premier Energies

• 21 exclusions, such as:

  • Aarti Drugs

  • Prince Pipes

  • Orchid Pharma

These changes indicate shifting investor sentiment and changing fundamentals among mid and small-cap companies. Companies like Hexaware and Premier Energies represent the tech and green energy sectors, which are currently gaining traction in both domestic and global markets.

Changes in Stock Weightages

Apart from additions and deletions, there have been important adjustments in weightages of existing constituents within the MSCI India Standard Index:

Weightage Increases:

• Cipla

• Indus Towers

• UltraTech Cement

• Grasim Industries

• Vodafone Idea

These increases are expected to lead to capital inflows of up to $50 million each, especially from passive index funds tracking MSCI weightage proportions.

Weightage Reductions:

• HDFC Bank

• ICICI Bank

• Infosys

• Bharti Airtel

The reduction in weightage for these major players could mean moderate outflows, but these companies remain core constituents of the index and industry leaders.

Why MSCI Index Changes Matter

The MSCI India Index is part of the MSCI Global Standard Index, used widely by institutional investors across the globe. It helps them benchmark performance, structure portfolios, and allocate assets.

When a company is added to the index, it often leads to:

• Increased visibility

• Higher institutional investment

• Improved liquidity

On the contrary, removal from the index or weightage reduction can result in:

• Sell-offs by index-tracking funds

• Reduced analyst coverage

• Weaker valuation multiples

Hence, the MSCI updates are closely watched by market participants.

Conclusion

The MSCI index reshuffle for May 2025 signals a strong show of confidence in companies like Coromandel International and Nykaa, while also highlighting the evolving landscape of Indian small and mid-cap stocks.

Paytm’s continued exclusion, coupled with big shifts in the Smallcap index, reflects changing investor sentiment and market fundamentals.

These changes will be effective from May 30, 2025, and investors will be closely tracking the market response, stock inflows, and sectoral trends following these developments.

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