India has overtaken China for the first time ever in a key MSCI equities index, bolstered by steady economic growth and strong flows.
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India’s weight in the MSCI investible large-, mid- and small-cap index has risen to 2.35 per cent, greater than China’s weight of 2.24 per cent, Morgan Stanley said in a note on Tuesday.
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“India will continue to gain share due to market outperformance, new issuances and liquidity improvements,” analysts led by Jonathan Garner of Morgan Stanley said.
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India’s nominal gross domestic product growth rate is running in the low teens, more than thrice the economic growth in China, generating a “profound divergence in earnings growth environment”, according to the brokerage.
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China’s weight on the index had peaked in early 2021.
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Earlier this month, Morgan Stanley forecast that India will overtake China in the MSCI Emerging Markets index as India’s stock market rally was “only past the halfway mark”.
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India’s rising weightage in the MSCI indexes will bring additional inflows, analysts said.
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India is among the best-performing markets this year globally, with its benchmark indexes NSE Nifty 50 and S&P BSE Sensex up 17 per cent and 15 per cent, respectively.
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China’s Shanghai Composite index is down about 9 per cent this year amid concerns over the economy and the property sector.
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First Published: Sep 18 2024 | 11:29 AM IST