In an announcement made on October 26, 2020 for the MSCI Global Standard Indexes, MSCI or Morgan Stanley Capital Investment said that it will tweak FOL or foreign ownership limits in the MSCI Global Indexes comprising Indian securities coinciding with the November 2020 Semi Annual Index Review (SAIR) at the close of November 30, 2020, effective December 1, 2020.
Further in a release MSCI stated that the FOL tweaks are resulting from the relaxation of the FPI limit of Indian companies to the sectoral limit.
The FOL for securities in the MSCI India Equity Universe will be equal to the limit as per the 'Automatic Route' with the exception of cases where a higher limit has been agreed to under the 'Government Route' or where lower limit has been set by the company's board and its General Body.
Besides MSCI has said it will review the number of shares and the free float as per the cut off dates and triggers in various sections of the Global Investable Market Indexes methodology. MSCI, however, will not conduct an additional review of the free float for securities only subject to the FOL changes.
On the implementation of the new regime on FOL, MSCI India will rope in passive funds to the tune of $2.5 billion, estimates global index major.
Interestingly, depositories including NSDL and CDSL, in April this year, raised the FOL for all listed entities to their sectoral limits.
Below are listed some of the stocks that can see a raise in FOL are:
Adani Green Energy
Kotak Mahindra Bank
Mahindra & Mahindra