In yet another feat to India’s growing clout in the world economy, the country has become the sixth-largest market in the MSCI All Country World Investable Market Index (ACWI IMI), surpassing China.
The global index tracks capital market performance across the world. The index includes large- and mid-cap stocks and is a more inclusive version of the widely tracked MSCI ACWI Index.
India’s weight in the MSCI ACWI IMI stood at 2.35 per cent in August, 11 basis points higher than China’s 2.24 per cent. India trails France marginally, by just three basis points. China’s weight has fallen by half since peaking in early 2021, while India’s weight has more than doubled during this period.
Earlier this month, strong fundamentals helped India pip China in the MSCI Emerging Market (EM) IMI to become the largest weight. The MSCI Emerging Markets IMI captures large, mid and small cap representation across 24 Emerging Markets (EM) countries.
India’s new position as the top emerging market in the MSCI EM IMI, along with the sixth-largest weight in the MSCI ACWI IMI, highlights the country’s growing prominence on the world investment map. There is financial stability and the growth momentum in the economy continues to be strong.
Other reasons include a high growth rate, stable government, reduction in inflation and financial discipline by the government.
As per a note by global brokerage Morgan Stanley, “India will continue to gain share due to market outperformance, new issuance, and liquidity improvements”.
Jonathan Garner, Chief Equity Strategist for Asia and Emerging Markets at Morgan Stanley, said that India’s nominal GDP growth rate is “currently in the low teens, more than three times higher than China’s”.
India remains its top preference in the EM region, and its second choice in the Asia-Pacific. However, the country’s weight in the EM index could have some more distance to travel before it peaks.
As per market watchers, the Indian economy continues to do well and the macros are improving as indicated by the 47 per cent growth in foreign direct investment (FDI) in the April-June period in FY25.
