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New Delhi| Morgan Stanley announced that India overtook China in terms of its weighted value in the MSCI Emerging Markets Investable Market Index. In India, it now weighs 22.27 per cent, up from 21.58 per cent in China.

MSCI IMI comprises 3,355 stocks, in which large, medium and small cap companies are incorporated. The index covers the stocks of 24 countries with emerging markets and aims to cover about 85 per cent (free float adjusted) market capitalization available to investors in each country. The main MSCI EM index (standard index) consists of large and medium cap companies, while IMI has been made more comprehensive with large, medium and small cap stocks. India’s higher weightage than China in MSCI IMI is due to the higher weighted capacity of small-caps. According to analysts’ estimates, Indian equities could see inflows of around US$4 to 4.5 billion following this change in MSCI EM IMI. This change has been due to the strong fundamentals of the Indian economy and the excellent performance of corporates.

Additionally, the Indian equity market has a broad base of profits, which is reflected in large cap as well as medium-cap and small-cap indices. A 47 per cent increase in foreign direct investment (FDI) at the beginning of the year 2024, a decrease in crude oil prices and substantial foreign portfolio investment (FPI) in Indian debt markets, are among the key factors contributing to this positive trend.