India's weight in key MSCI equity index hits another high, to boost inflows

Bengaluru: India's weight in MSCI's Global Standard index, which tracks emerging market stocks, has risen to another record high, boosting prospects of more inflows into its equity markets.

With this, India has further narrowed the gap with China on the index. While China's weightage in the index will fall to 25 per cent from 25.4 per cent, India's weight will rise to 19 per cent from 18.2 per cent. The changes, announced on Wednesday, will be effective May 31.

The May review will lead to about $2 billion - $2.5 billion inflows into India, Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research said.

Consistent flows from domestic institutional investors and steady participation by foreign investors means that there is potential for India to surpass 20 per cent weightage in the MSCI Global Standard index by the second half of 2024, Pagaria said.

With the May rejig, India's stock count in the MSCI Global Standard index is at 149, the highest ever for the country.

India's rising prominence in emerging markets is due to robust performance of its equities, particularly in the mid-cap segment, amid the relative underperformance by other emerging markets, especially China, analysts have said.

MSCI will add 13 Indian companies, the most among emerging markets, to the Global Standard Index from May end.

These include JSW Energy, Canara Bank, Indus Towers in the large-cap segment, and 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 to the mid-cap index from small-cap by MSCI.

Berger Paints will be removed from the MSCI index while Indraprastha Gas and Paytm's parent One 97 Communications have been downgraded to the small-cap index from the mid-cap index.

Housing Urban Development Corp and Waaree Renewable Technologies have been added to the small-cap index.

Separately, 29 Indian stocks have been added to the MSCI Domestic index while 15 have been moved to other categories or removed.