India Narrows Gap with China in MSCI Index: $2 Billion Inflows Expected

India’s weight in MSCI’s Global Standard index, which tracks emerging market stocks, has reached an all-time high of 18.2%. This surge in weightage narrows the gap with China, whose weight in the index will fall to 25% from 25.4%. The changes, announced recently, will take effect on May 31.

Key Points:

• India’s stock count in the MSCI Global Standard index now stands at 149, the highest ever for the country.

• The May review is expected to lead to approximately $2 billion inflows into India.

• Consistent flows from domestic institutional investors and foreign participation contribute to India’s rising prominence in emerging markets.

• MSCI will add 13 Indian companies to the Global Standard Index, including JSW Energy, Canara Bank, and Mankind Pharma.

India’s robust equity performance, particularly in the mid-cap segment, has bolstered its position, while China faces relative underperformance. Analysts predict that India could surpass 20% weightage in the MSCI Global Standard index by the second half of 2024.

In summary, India’s growing influence in emerging markets signals positive prospects for its equity markets, attracting significant investment inflows.