Tuesday, May 21, 2024
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India closes gap with China as weight in MSCI equity index hits record high; $2 billion inflows expected

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Big boost for Indian stock markets! India’s weightage in the MSCI Global Standard index, which tracks emerging market stocks, has reached a new record high, enhancing the likelihood of increased inflows into its equity markets. This development has allowed India to close the gap with China on the index.
As per the changes announced on Wednesday, effective May 31, China’s weightage will decrease from 25.4% to 25%, while India’s weight will increase from 18.2% to 19%.
Abhilash Pagaria, an analyst at Nuvama Alternative and Quantitative Research told Reuters that the May review is estimated to result in approximately $2 billion of inflows into India. He also believes that with consistent flows from domestic institutional investors and steady participation by foreign investors, India has the potential to exceed 20% weightage in the MSCI Global Standard index by the second half of 2024.
The May rejig has brought India’s stock count in the index to an all-time high of 149.
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Analysts attribute India’s growing prominence in emerging markets to the robust performance of its equities, particularly in the mid-cap segment, amidst the relative underperformance of other emerging markets, especially China.
According to the Reuters report, MSCI will add 13 Indian companies, the highest among emerging markets, to the Global Standard Index from the end of May. These additions include JSW Energy, Canara Bank, and Indus Towers in the large-cap segment, as well as Mankind Pharma, Bosch, Solar Industries, NHPC, Torrent Power, Thermax, Jindal Stainless, and Sundaram Finance in the mid-cap index. Phoenix Mills and PB Fintech have been upgraded from small-cap to mid-cap by MSCI.
However, Berger Paints will be removed from the MSCI index, while Indraprastha Gas and Paytm’s parent One 97 Communications have been downgraded from mid-cap to small-cap.
Housing Urban Development Corp and Waaree Renewable Technologies have been added to the small-cap index. In a separate development, 29 Indian stocks have been added to the MSCI Domestic index, while 15 have been moved to other categories or removed altogether.

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