Sun Sep 08 13:12:42 UTC 2024: ## India Overtakes China in MSCI Emerging Markets Index
**New York:** India has surpassed China in terms of weightage in the MSCI Emerging Markets Investable Market Index (MSCI EM IMI), as announced by global financial institution Morgan Stanley. India’s weight in the index stands at 22.27%, surpassing China’s 21.58%. This shift is attributed to India’s higher weighting of small-cap stocks in its basket.
The rebalancing reflects broader market trends. While Chinese markets have faced challenges due to economic headwinds, India’s markets have benefited from favorable macroeconomic conditions. India’s strong economic fundamentals and robust corporate performance have fueled superior equity market performance in recent times.
Further, the gains in the Indian equity market have been widespread, encompassing large, mid, and small-cap indices. Contributing factors include a 47% increase in foreign direct investment (FDI) in early 2024, declining Brent crude prices, and substantial foreign portfolio investment (FPI) in Indian debt markets.
This trend is reflected in MSCI’s increased allocation of Indian stocks in its indices. Between March and August 2024, India’s weightage in the MSCI EM Index rose from 18% to 20%, while China’s weightage declined from 25.1% to 24.5%.
Analysts anticipate inflows of approximately $4 to $4.5 billion into Indian equities following this rebalancing. To sustain its desired investment pace for economic growth, India requires capital from both domestic and foreign sources. The increase in India’s weight in global EM indices is seen as a positive development in this context.
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