Laurus, Biocon, SAIL shares among top MSCI India Standard Index inclusion candidates

JM Financial, in a fresh note, identified Laurus Labs Ltd and Biocon Ltd as high-probability candidates for inclusion in the MSCI India Standard Index from the Small Cap Index in the August review cycle. The brokerage said both stocks qualified for potential largecap upgrades following the recent improvement in their market capitalisation and liquidity metrics.

Besides, the domestic brokerage sees Ather Energy Ltd and SAIL as medium-probability additions to the MSCI India Standard Index. Both names are close to adequate free-float adjusted market cap above MSCI's minimum size threshold. Lenskart and Schaeffler India are seen as low-probability candidates, as their inclusion hinges on continued free-float adjusted market cap improvement over the remaining observation period.

The MSCI India Standard Index rebalancing announcement is scheduled for August 12, post-market hours. The rejig could see as many as 12 inclusions and one exclusion with an estimated inflow of $3.2 billion. The changes would take effect on August 31. 

"On aggregate, the high-probability inclusions and exclusions could drive passive inflows into India of about $3.4 billion and outflows of approximately $159 million, resulting in a net positive passive inflow of roughly $3.2 billion. These estimates are indicative and assume no concurrent changes in country-level weights or EM index rebalancing. 

In the case of Ather Energy, JM said the stock is experiencing highly bullish market sentiment driven by robust
volume growth and an aggressive Rs 2,500 crore fund-raising roadmap. Since its stock market debut in May’25 at an issue price of Rs 321, the stock has had a notable rally.

On SAIL, JM said it is one of India's largest state-owned steel producers holding the prestigious ‘Maharatna’ status, and the government of India has a 65 per cent stake in the company. The company is experiencing rapid quarterly momentum, evident from the 390.73 per cent YoY surge in profit after tax (PAT) for the March quarter.

If included in MSCI Standard index, JM sees $209 million passive inflows for Ather Energy and $188 million for SAIL. Lenskart and Schaeffler India, whose probabilities are low, could attract inflows of $164 million and $157 million, respectively.   

Among migration candidates, Laurus Labs may attract $496 million inflows, followed by Biocon ($295 million), Apar ($261 million, medium probability), Uno Minda ($205 million, medium probability), Glenmark ($310 million, low probability), Coforge ($514 million, low probability) and Thermax ($200 million, low probability). 

"On the exclusion side, SBI Card screens as a high-probability removal. It has seen persistent deterioration in free-float market cap owing to fundamental pressures and structurally low free-float, dragging it below the minimum size or liquidity threshold stipulated for continued index membership," JM Financial said.

It said the price impact on inclusion names can play out due to active institutional positioning. Historical evidence suggests 8–15 per cent cumulative excess returns in the 20 trading days preceding MSCI announcements for high-conviction inclusion candidates.  Exclusion candidates may face accelerated selling pressure as the announcement date approaches. Liquidity management is key for affected holders, JM said.