2024-10-03 20:20:43
New Delhi: India’s dominance in the MSCI Emerging Markets Index is increasing. By August 2024, India’s weightage in the index has reached 19.9%. This is close to China’s 24.42%. India’s economic progress and market boom have achieved this feat. The MSCI Emerging Markets Index represents large and mid-cap companies from 24 emerging markets (EM). The index consists of 1,328 companies. The Emerging Markets Index covers approximately 85% of free float-adjusted market capitalization in each of the 24 countries. The weightage of the top 5 countries in the MSCI EM index by August 2024 was about 80%. China leads with 24.42%. After that India is at second place with 19.9%. Then there are Taiwan (18.77%), Korea (11.67%) and Brazil (4.50%). The total weightage of the remaining 19 countries is 20.73%.
China was dominant in 2020
China dominated in 2020 with almost 40% weightage. But, due to India’s strong economy, China’s weightage is decreasing. The inability of Chinese companies to meet MSCI’s criteria, such as market capitalization and minimum free float requirements, is one reason behind this.
On the other hand, India’s weightage is increasing. The reason for this is the rapidly growing economy. India is one of the fastest growing economies in the world with a growth rate of 7-8%. The growth of the services sector in areas such as IT and telecommunications is a major catalyst for India’s economy. Two-thirds of India’s working population is young, providing a cheap and dynamic labor force.
India has made a strong comeback
Indian markets have made a strong comeback after Corona. It has given better returns compared to other EM countries. The benchmark index Nifty 50 has given a return of 17.35% this year (till September). In the last five years, Nifty 50 has given annual returns of 14.9% in 2020, 24.12% in 2021, 4.32% in 2022 and 19.42% in 2023.
SEBI’s relaxation of foreign ownership limits in Indian companies and increase in IPOs in the Indian market have also contributed to India’s higher weighting in the MSCI EM index. 243 companies launched their IPO in 2023. These were listed on Indian exchanges. The pace of IPO continues in 2024. Many big and small companies are planning IPOs in the coming months.
The list includes Rs 25,000 crore IPO of auto giant Hyundai Motor India, Rs 3,750 crore IPO of quick commerce food delivery company Swiggy and Rs 9,000 crore IPO of Zomato and Rs 10,000 crore IPO of public sector company NTPC Green. This will increase the amount of cash and business in the market. This will increase India’s weightage in the MSCI EM index in future.