The paywalled article is right here: https://the-ken.com/story/nse-bse-and-the-benchmark-blues/
They’ve fairly a number of feedback to make on MSCI indec because it has to rememeber the international holding restrict in every inventory. The principle Nifty and BSE indeices are market cap weighted and do not endure from distortions. It will have been mice if the article has explicitly acknowledged this.
I presume that the abstract under is OK for quoting.
“NSE, BSE, and the benchmark blues
With a US$3 trillion market cap, India’s inventory market is the world’s eighth largest. And buyers navigate this sprawl via benchmarks such because the S&P BSE Sensex and the Nifty 50. They supply context in a world of seeming chaos.
The facility of those indices can’t be understated. An organization that’s chosen for an index is more likely to see an enormous surge in investments, particularly from passive funds, which merely monitor these indices. With passive funds seeing their belongings surge to US$44 billion over the previous yr, the unstated energy of indices solely grew.
Take the case for Bharti Airtel—India’s second largest telco. In August final yr, MSCI slashed Bharti’s weightage within the MSCI India Index from 3.5% to 1.8% and within the MSCI Rising Markets Index from 0.285% to 0.144%. Bharti’s shares slid 4% in response to the information and analysts estimated that between Rs 3,500 crore (US$470 million) to Rs 3,800 crore (US$510 million) could be pulled out of the inventory.
This kind of fallout naturally means elevated scrutiny of the methodology of indexes, as any distortion on a big index can have a far-reaching ripple impact. However whereas the European Union already regulates indices, most different markets,…