2024-09-05 21:29:31
New Delhi: India’s economy is growing at the fastest pace in the world and is overtaking China in many cases. Amid the boom in domestic stock markets, India has overtaken China in the MSCI EM Investable Market Index (IMI). Not only this, India has also come close to defeating the dragon in the more popular Emerging Market (EM) Index. According to Morgan Stanley, on Wednesday, India has overtaken China to become the largest weighting in the MSCI EM IMI. Also, India is very close to overtaking China in the EM index. The MSCI EM IMI index covers large, medium and small stocks in 24 emerging markets. With 3,355 constituents, this index covers about 99% of the free float-adjusted market cap in each country. After the reshuffle in the MSCI indices last month, analysts had estimated that about $ 4 to $ 4.5 billion could be invested in Indian equities. According to Nuvema Alternative and Quantitative Research, given the current momentum, India could cross the 22% weightage in the MSCI EM index by the end of the year. Morgan Stanley said that the increased weightage will increase foreign flows into the country. But the problem is that domestic market participants are bidding more than them. The brokerage said that the increase in index weightage could be a clear sign of enthusiasm.
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Calling India the top pick in the EM context and the No. 2 pick in the Asia-Pacific context, the brokerage said that fundamental factors certainly apply to India and India’s new position in EM is not worrisome. Like many other investors, Morgan Stanley also believes that the fall in stocks may bring money to the sidelines. This means that such a fall will not last long. Morgan Stanley analysts wrote in a note that the stock market in India has not yet reached its peak and India’s weightage in the EM index may have to cover some more distance to reach the peak.
This calendar year, the MSCI EM index has risen by seven per cent while the Nifty has given a return of 15%. On the other hand, Chinese equities have risen by 10 per cent. MSCI India has risen 22% so far this year and no other global index is even close to it. Domestic brokerage firm Emkay Global has predicted that the Nifty will reach 26,000 points by October 2025.