HDFC Bank-RIL out of MSCI EMI top-10
There has been such a storm of Artificial Intelligence (AI) all over the world that even the strongest pillars of the Indian stock market have not been able to save their credibility. The country’s two most valuable companies, Reliance Industries (RIL) and HDFC Bank, have suffered a major setback. This is the first time since 2000, i.e. in the last 26 years, that there is not a single Indian stock in the list of top-10 stocks of the prestigious MSCI Emerging Markets (EM) Index. On one hand, while the tech companies of Taiwan and South Korea have registered a huge surge due to AI, on the other hand, both these giants of the Indian market have fallen far below their peak levels.
How did the Indian giants get out of the top-10?
This change did not happen overnight. Till March this year, HDFC Bank and Reliance Industries were firmly in this global index. Then HDFC Bank was at seventh position and Reliance was at eighth position. But now the situation has changed. Due to the recent fall, both these shares have slipped to 11th and 12th position respectively. This decline has also affected their individual weightage, which has now come down to less than 0.8 percent.
The MSCI EM Index gives direction to those big funds around the world, whose size is more than $ 700 billion (about Rs 58 lakh crore). In such a situation, being out of the top-10 simply means that the flow of foreign funds is currently turning more towards other countries than the Indian giants.
Foreign tech companies won
The biggest reason behind this entire upheaval is the excellent performance of AI related companies in the stock market. The world’s money is now going in large quantities towards companies taking advantage of the AI wave. If we look at the figures, there has been a spectacular rise of 48 percent in the shares of the leading chipmaker company TSMC. At the same time, Samsung Electronics has registered a huge jump of 147 percent and SK Hynix has registered a huge jump of 194 percent.
In stark contrast, the champions of the Indian market have languished. HDFC Bank shares have fallen by about 26 per cent from their all-time high, while Reliance Industries shares have fallen by about 20 per cent from their highs.
The stature of Indian shares decreased in foreign indices.
Currently this index includes shares of more than 1,200 companies. Although about 20 percent of these are owned by Indian companies, the top positions are now completely occupied by Taiwanese and Korean companies. The situation is such that about 70 percent of the index is now held by only three countries, Taiwan, South Korea and China. The total weightage of three companies alone, TSMC, Samsung and SK Hynix, has reached close to 30 percent in the index. Due to these constantly changing global conditions, India’s total weightage in the MSCI EM index has fallen to 10.87 percent, which is the lowest level in the last 6 years.
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