India has overtaken China in terms of its weightage in the Morgan Stanley Capital International (MSCI) Emerging Markets Investable Market Index during this month. The weightage of India stood at 22.27 per cent as compared to 21.58 per cent of China in the index. An announcement in this regard was made by Morgan Stanley. The rebalancing reflects broader market trends. While Chinese markets have struggled on the back of economic headwinds in that country, India’s markets have benefitted from favourable macroeconomic conditions.
In the recent past, the country has posted a much superior equity market performance, driven by strong macroeconomic fundamentals of the Indian economy as well as robust performance by the corporates. Further, the gains in the Indian equity market have been broad-based, reflected across large-cap as well as mid-cap and small-cap indices. Key factors contributing to this positive trend include a 47 per cent increase in foreign direct investment in the early part of this year, decreasing Brent crude prices, and substantial foreign portfolio investment in Indian debt markets. According to analysts’ estimates, post this rejig in the index, Indian equities could witness inflows of about 4 to 4.5 billion dollars.