Search the Internet          Tips  Sites: Finance, Investment

MSCI India index recast stokes new entrants' shares

Shares of Indian companies included in the MSCI Emerging Markets Free Index for the first time rose sharply in a flat Monday market as investors expected foreign fund buying in these stocks to align their portfolios.

Consumer goods maker Dabur India surged 10.4 per cent, private HDFC Bank rose 5.4 per cent, Reliance Petroleum, India's biggest private refiner edged up 3.7 per cent and overseas telephony monopoly Videsh Sanchar Nigam Ltd was up 2.6 per cent.

After rising to the day's peak of Rs 77.30 Dabur retraced to Rs 76, still up 8.6 per cent by 1038 IST while HDFC Bank was traded at Rs 242.25, up 3.04 per cent, off Rs 247.90 high.

Reliance Petroleum was trading at Rs 54.85, up 3.49 per cent, after hitting a peak of Rs 54.95 and Videsh Sanchar was trading at Rs 353, up 2.36 per cent off the high of Rs 353.75.

The benchmark Bombay index was steady at that time.

"Some of these shares are underowned (by foreign funds), so there is some buying on expectations that the new funds which enter India could mark their investments to the MSCI index," said Abhay Aima, portfolio manager at HDFC Bank.

Foreign portfolio investors have ploughed a record $2.3 billion in Indian debt and equity instruments till date in 2001 compared with $1.56 billion in all of 2000.

These flows came in even though it was expected that India's weightage in the MSCI Emerging Market Free Index would fall after MSCI said that it would adjust its indices for free float.

Tell us what you think of this report