India’s Weightage Surges on MSCI Global Standard Index

India’s weightage in MSCI Global Standard (Emerging Markets) Index has reached one Historical high of 18.2% Following MSCI’s February review. bounce it, Almost double from November 2020This is attributed to various factors such as standardized foreign ownership limits, continued domestic equity rally and underperformance relative to other emerging markets, especially China.

Factors driving growth in India’s weight

  1. Standardized Foreign Ownership Limit (FOL) in 2020: India’s adoption of standardized foreign ownership limits has increased its importance in the MSCI indices.
  2. Sustained Domestic Equity Rally: The sustained upward trend in domestic equities has strengthened India’s position in the MSCI index.
  3. Comparative underperformance of other emerging markets, especially China: Compared to other emerging markets, particularly China, India’s performance has been relatively strong, leading to higher weighting in the MSCI index.

potential growth projection

India’s strong performance suggests the possibility of further increase in its weighting. With continued inflow of domestic institutional investors and steady participation of foreign portfolio investors, India could cross 20% weighting in MSCI Global Standard Index by early 2024.

impact of february review

Additions to MSCI Global Standard Indices:

  • Five Indian stocks were added to the Global Standard Index, reflecting the growing prominence of Indian equities.
  • State-owned lenders Punjab National Bank and Union Bank of India were included in the large-cap index, while Bharat Heavy Electricals and NMDC joined the mid-cap index.
  • GMR Airports Infrastructure transitioned from small-cap to mid-cap index.

Deletions and changes:

  • MSCI removed 66 Chinese stocks from the index while adding only five, indicating a significant change in market dynamics.

estimated inflow

Nuvama estimates alternative and quantitative research $1.2 billion in passive foreign portfolio investment flows India’s benchmark and small-cap indices, following the February review, highlight growing investor interest in Indian equities.

India's weightage increased on MSCI Global Standard Index_40.1

Leave a Comment