MSCI may remove ZEEL from Global Small-cap Index. Nuvama sees $22 million outflow

livemint.com:

Zee Entertainment Enterprises Limited (ZEEL) may get excluded from the MSCI Global Small-cap Index. though, the effective date for Zee-Sony merger is yet to be announced, but the National Company Law Tribunal has given its approval for amalgamation of Zee Entertainment Enterprises Ltd and Spny Pictures. As Zee-Sony merger date is not known, MSCI is yet to declare last date of trade session for ZEEL shares.

But, both companies are in the final stage of completing the merger process. As per the estimated date for exclusion of ZEEL shares from MSCI Global Small-cap Index, ZEEL shares' last trade session may fall around September end to early October 2023. The global brokerage predicted to the tune of $22 million outflow after exclusion of ZEEL shares from the MSCI index.

Normally, after last trade date of a stock, it gets excluded from the MSCI Global Small-cap Index in up to seven trade sessions. So, the new entity after Zee-Sony merger may list on the MSCI Global Small-cap Index in November 2023. Nuvama estimated that exclusion of ZEE shares from MSCI index may lead to outflow of to the tune of $22 million as index funds may exit the stock after exclusion.

However, Nomura also made it clear that after inclusion of the new entity in MSCI index, near $230 million inflow is possible. The global brokerage report went on to add that ZEEL shares will expire in Future & Options (F&O) on last date of trade on MSCI Global Small-cap Index. According to the existing methodology, new derivatives will require at least six months of listing and most importantly, SEB approval for inclusion in MSCI index.