India’s weight in key MSCI equity index hits another high, to boost inflows

India’s weight in MSCI’s Global Standard index, which tracks emerging market stocks, has risen to another record high, boosting prospects of more inflows into its equity markets.

India's weight in MSCI's Global Standard index, which tracks emerging market stocks, has risen to another record high, boosting prospects of more inflows into its equity markets.

With this, India has further narrowed the gap with China on the index. While China's weightage in the index will fall to 25% from 25.4%, India's weight will rise to 19% from 18.2%. The changes, announced on Wednesday, will be effective May 31.

The May review will lead to about $2 billion inflows into India, Abhilash Pagaria, analyst at Nuvama Alternative and Quantitative Research said.

Consistent flows from domestic institutional investors and steady participation by foreign investors means that there is potential for India to surpass 20% weightage in the MSCI Global Standard index by the second half of 2024, Ms. Pagaria said.

With the May rejig, India's stock count in the MSCI Global Standard index is at 149, the highest ever for the country.

India's rising prominence in emerging markets is due to robust performance of its equities, particularly in the mid-cap segment, amid the relative underperformance by other emerging markets, especially China, analysts have said.

MSCI will add 13 Indian companies, the most among emerging markets, to the Global Standard Index from May end.