India emerges as the largest MSCI Emerging Market surpassing China; check details

According to a report, India has emerged as the largest emerging market in the MSCI IMI gauge, surpassing China, which could help it attract more foreign fund inflows.

Morgan Stanley's report stated that after overtaking China to take the leadership position at the MSCI EM investable market index early this month, India is likely to witness foreign fund inflows of ₹37,000 crore.

According to the August 30 report of MSCI, which is a leading global index services provider, India’s weightage was at 21.41%, a notch below China’s 21.96%.

However, India overtook China this month in weightage on the EM IMI gauge following consistent gains in the stock markets despite peak valuations, the report noted.

The report also noted that India’s turning leader on the EM IMI gauge was long anticipated as the country had been narrowing the gap in weightage with China since 2020.

China was the leader in the index earlier, peaking in 2021. Since then, its weightage has fallen by half as Chinese markets underperformed due to a host of reasons, such as COVID-19 and a growth slowdown.

On the other hand, Morgan Stanley stated that India has emerged as the sixth largest market globally, barely behind France.

“India will continue to gain share due to market outperformance, new issues and liquidity improvements,” the report noted.

Indian stock markets have been trading at record-high levels, with SENSEX advancing around 14.8% in 2024 so far. The broader NIFTY50 has gained more than 16 in this year so far.

The key indices advanced in double digits in 2024 even as FIIs remained net sellers in the cash segment in April, May and August. FIIs turned net buyers in September and have put in around ₹15,300 crore in Indian equities in the cash segment so far this month.