Indian Equities Gain Ground Over Chinese Counterparts in Global Indexes

Ira Singh
Khabar Khabaron Ki,14 Feb’24

Indian equities are witnessing a surge in interest among international investors, leading to a narrowing gap in weightage between Indian and Chinese stocks on the MSCI index. Reportedly, India has narrowed the gap with China in MSCI’s Global Standard index, which tracks emerging market stocks for investors, after the latest revision.The trend indicates a notable preference for shares listed on Dalal Street over those in Shanghai, marking a milestone in the dynamics of global equity markets.

Since January 2021, India’s representation in the MSCI standard index has more than doubled, soaring from 8.9% to a substantial 18.2%. In contrast, China’s weight in the index has experienced a decline, dropping from 40.1% to 25.4% during the same period. period.This is the shortest gap ever between the weights of the stock of the two countries.This remarkable shift underscores a fundamental reevaluation of investment strategies, with global investors reallocating their portfolios to capitalize on the burgeoning opportunities in the Indian market.

Index provider MSCI raised India’s weightage in the index to an all-time high of 18.2 per cent on Tuesday, which could lead to inflows of about $1.2 billion, analysts said.

“We expect India’s growth trajectory to continue, aiming to surpass a 21-22% share in the MSCI EM index by the latter half of the year,”Abhilash Pagaria,head of Alternative & Quantitative Research, Nuvama Institutional Equities believes.The gain for India can be attributed to a sustained rally in equities and relative underperformance of other emerging markets, especially China.

India’s stock count in the MSCI Standard index rose to 131, with the inclusion of a net of 17 Indian stocks over the past four reviews. “This marks an improvement from 2022, where only a net of 9 Indian stocks were included. The notable factors contributing to this increase in 2023 include India’s substantial rally compared to other Emerging Markets and MSCI’s shift from semi-annual to quarterly rebalancing for stock inclusions/exclusions,” Pagaria highlighted.

Just last month, India had surpassed Taiwan to become the market with the second highest weightage in the MSCI EM index, trailing only China, according to information.