Index-benchmark provider FTSE, a global entity, has announced its All-World Index series, which includes 13 new Indian stocks, the highest number of inclusions from any country in this update. These stocks are part of a broader restructuring that includes additions from Taiwan, Korea, Hong Kong, and Australia.
Indian Stocks Included in FTSE All-World Index:
- Bharat Dynamics
- Bank of Maharashtra
- Central Bank of India
- Cochin Shipyard
- Endurance Technologies
- Escorts Kubota
- GE T&D India
- Hitachi Energy India
- Housing and Urban Development Corporation (HUDCO)
- IRB Infrastructure Developers
- KEI Industries
- Lloyds Metals and Energy
- Motilal Oswal Financial Services
The index is market-capitalization-weighted, containing large and mid-cap stocks of FTSE GEIS, aiming to capture 90% of market capitalization in the stock markets of both developed and emerging markets. It can be considered one of the most core benchmarks by which investment products like funds, ETFs, and derivates are valued.
Other Key Changes in FTSE Indices
FTSE Large Cap Index: Added 14 stocks to the list, including Bharat Dynamics, Dixon Technologies, Jindal Stainless, Linde India, Mazagon Dock Shipbuilders, and Oil India. Those excluded include Adani Wilmar, One 97 Communications (Paytm), and Page Industries.
FTSE Mid Cap Index: There have been too many inclusions and exclusions to list in the indices. Notable inclusions are Adani Wilmar, Bank of Maharashtra, Tata Elxsi, and a few more, while the more notable exclusions are Dixon Technologies, Jindal Stainless, Oil India, and several more.
Key Points on the FTSE All-World Index
It then becomes one of the most important tools for all classes of investors who want to invest in the global equity market, with its developed and emerging markets coverage.
It finds its application in many financial products and forms the basis for various kinds of decisions on investments by individuals and institutions alike.
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People May Ask
What is the FTSE Russell All-World Index?
It is a market-capitalization-weighted index that includes large and mid-cap equity from the FTSE Global Equity Index Series. The Index covers 90% of the world market capitalization in the GEIS universe.
What resulted in keeping some stocks, like Adani Wilmar, Paytm, etc., out of the indices?
One stock gets excluded based on changes in the level of market capitalization, changes in the liquidity level, or due to any reclassification in the sector. Regular rebalance of the indices should capture the right pic of the market.
What are the effects of these changes on investors?
Each such change in the indices will typically have an implication of fund flow for the investors in case ETFs and funds that are tracking those particular indices rebalance their portfolios on account of such changes. This may, in fact, lead to changes in the prices of shares of companies like such new inclusions or others that are excluded.
What are the criteria for a stock to be included in the FTSE All-World Index?
The criteria of selection for such kinds of stocks are based on market capitalization, liquidity, and industry classification. FTSE includes the criteria whereby it ideally covers 90% of the market cap in each region.
Why did 13 Indian stocks get in the FTSE All-World Index?
The inclusions were part of the process that FTSE follows at given intervals to reassess and realign the index to represent the global market scenario. The strong performance and market capitalization of Indian stocks were some of the reasons that justified the inclusions.
What is the effect of these inclusions on the Indian market?
As many global funds and ETFs track these indices, inclusion in a global index like the FTSE All-World often leads to increased visibility and investment in the included stocks.
How often does the FTSE rebalance its indices?
The FTSE rebalancing of indices is done quarterly. However, drastic changes sometimes take place at annual reviews or special rebalance events.
What is the importance of being part of the FTSE All-World Index?
Being a part of this index is considered prestigious and likely to generate interest by more global investors, hence price appreciation, along with liquidity.
How do investors benefit from these index changes?
Investors may consider a purchase of the stocks entering the index when the new stocks are underperforming on the expectation that the buying demand from funds and ETFs is likely to push up prices.
Will the deletions affect the performance of the deleted stocks?
Stocks deleted from major indices frequently experience a drop in demand, a situation that may result in price drop, although not necessarily the case at all times.
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