New Delhi, Sept 19: India has recently risen to become the sixth-largest market in the MSCI All Country World Investable Market Index (ACWI IMI), surpassing China. This index, which tracks global capital markets, includes both large and mid-cap stocks, offering a more comprehensive view than the widely known MSCI ACWI Index.
As of August 2024, India’s weight in the MSCI ACWI IMI reached 2.35%, surpassing China’s 2.24%. India is now only three basis points behind France in the index. China’s share has decreased significantly since early 2021, while India’s has more than doubled over the same period.
Earlier this month, India also outperformed China in the MSCI Emerging Markets (EM) IMI index, becoming the largest market by weight. This index covers large, mid, and small-cap stocks in 24 emerging market countries. India’s advancement in both the MSCI EM IMI and MSCI ACWI IMI highlights its increasing role in global investments.
India’s growing importance is attributed to its strong economic fundamentals, high growth rate, stable government, reduced inflation, and effective financial management. Morgan Stanley forecasts continued gains for India due to its market outperformance, new market activities, and enhanced liquidity. Jonathan Garner, Chief Equity Strategist for Asia and Emerging Markets at Morgan Stanley, noted that India’s nominal GDP growth rate is in the low teens, significantly higher than China’s.
India is Morgan Stanley’s top choice in emerging markets and its second preference in the Asia-Pacific region. Despite its progress, the country’s weight in the emerging markets index may still have potential for further growth. Recent data shows a 47% increase in foreign direct investment (FDI) in the April-June period of FY25, reflecting the positive economic momentum.
