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

May15,2024



big incentive for indian stock market, MSCI tracks India's weightage in global benchmark indices emerging market stocks, has hit a new record high, raising the possibility of increased flows into its equity markets. This development has allowed India to narrow the gap with China on the index.
According to the changes announced on Wednesday, effective May 31, China's weighting will reduce from 25.4% to 25%, while India's weighting will increase from 18.2% to 19%.
Abhilash Pagaria, analyst at Nuwama Alternative and Quantitative Research, told Reuters that the May review estimated investment in India at around $2 billion. He also believes that with continued inflows of domestic institutional investors and steady participation of foreign investors, India has the potential to surpass 20% weighting in the MSCI Global Standard Index by the second half of 2024.
The change in May took the number of India stocks in the index to an all-time high of 149.
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Analysts believe India's rising prominence among emerging markets is attributed to the strong performance of its equities, especially in the mid-cap segment, amid the relative poor performance of other emerging markets, especially China.
According to a Reuters report, MSCI will add 13 Indian companies to the global benchmark index from the end of May, the highest among emerging markets. These additional stocks 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 parent One 97 Communications have been downgraded to small-cap from mid-cap.
Housing Urban Development Corp and Waari 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 shifted to other categories or removed altogether.



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