Two important events took place in the stock market on Friday -- FTSE Semi-annual and WisdomTree rebalancing.The act of rebalancing comes after an index rejig which can be done in various methods by adding new stock to the index, removing a particular stock from the index, or even increasing or decreasing the weightage of existing stock in the index.Index rejigs are a key event for the market because they help the market participants to gauge the direction in which the funds are moving, said an institutional sales trader at a domestic brokerage firm.An increase or decrease in the weightage of stock, or addition or deletion of a stock, hints at further fund inflows or outflows and several investors position themselves in the market accordingly, he added.Also Read | Explained: How rising bond yields impact stock marketsAn index rejig is followed by a rebalancing exercise by exchange-traded funds or mutual funds that mimic the index, to re-align their portfolio according to the changes.The index constituents are rearranged so as to maintain the proportion of asset allocation or keep the risk at a level in accordance with the index’s stated methodology."Rejigs within index underlyings are typically undertaken per set schedules. Every index has an underlying, clearly stated methodology. Over a period, market forces result in an index composition that may not quite align with the index's stated methodology. The rejig in indices ensure that constituents and weights are re-aligned periodically so as to tightly align with the stated principles," said Nirav Karkera, head of research at Fisdom."While index reconstitution and rebalancing activities should ideally be viewed as simple maintenance exercises, inclusion or exclusion has been observed to have an impact on prices of the particular shares. This can be majorly attributed to the change in capital flows directed towards the stock especially led by index-based ETFs and mutual funds that invest in the index and not in the underlyings specifically. The expectation of such a phenomenon associated with the inclusion or exclusion of a company's share snowballs into a relatively bigger impact by active traders attempting to pre-empt the change of flows and modify trades to be on the right side of the change," Karkera added.Also Read | Investment strategy: Questions to ask before adding stock to your portfolioThe constituent changes made in the Semi-Annual review of the FTSE Global Equity Index Series - Asia Pacific ex-Japan, Japan and China will be effective from Monday (September 20).The rebalancing activity usually begins a couple of days prior to the date the changes are implemented.The stocks that are expected to see the highest inflows as part of FTSE rebalancing are Adani Transmission, HDFC Life Insurance Co, Max Financial, Max Health and Laurus Labs, according to Abhilash Pagaria, Assistant Vice President – Research, Edelweiss Alternative Research.These stocks may see $36 million to $116 million worth of inflows as part of the rebalancing exercise, Pagaria had said in a note.Also Read | View: Should aluminium companies be part of your portfolio?Meanwhile, the Street also had an eye on the US-based WisdomTree India Earnings Index reconstitution which happens annually. The rebalancing for the same also took place on Friday.The US-based fund will add Indian Oil Corporation (IOC), Vedanta, Jindal Steel & Power and Info Edge to its index.Meanwhile, the fund will increase its weightage in Reliance Industries Ltd (RIL), Bharat Petroleum Corporation Ltd (BPCL), Hindustan Petroleum Corporation, Axis Bank and ICICI Bank, but decrease its weightage in Housing Development Finance Corporation (HDFC), Infosys, Tata Consultancy Services, Hindalco Industries, GAIL India and Grasim Industries, according to Pagaria.In terms of the highest inflow, RIL, IOC and BPCL would lead the charge whereas HDFC and Infosys are expected to witness the highest outflows, according to the note by Edelweiss Alternative Research.