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BSE: India will soon overtake China as the most influential in a major emerging markets index.
Bengaluru:
India is likely to soon overtake China as the most influential in major emerging markets indices, drawing in more foreign funds and adding fuel to a stock market rally that, though already The global best is “only halfway there”, said Morgan Stanley.
India’s weighting in MSCI’s emerging markets index rose to 19.8% after a rejig in August, closing at China’s 24.2%. In December 2020, India’s weight has steadily increased from 9.2%, while China’s weight has decreased from 39.1%.
“The rising weight is primarily higher absolute foreign flows,” analysts led by Ridham Desai said in a note on Wednesday.
“In the context of India’s underweight in the average emerging markets portfolio, it bodes well for foreign portfolio flows.”
Foreign portfolio investors (FPIs) have bought shares worth 531.78 billion rupees ($6.33 billion) so far in 2024, and have been net buyers since June, amid policy continuity and global interest rates following the country’s election. Bolstered by the immediate onset of cuts.
So far, steady inflows from domestic institutional investors, mutual funds and retail traders have helped propel the benchmark Nifty 50 to record highs. Its 16% jump this year is higher than other markets, including China.
Mr. Desai expects the rally to continue as fiscal stability allows private borrowing and spending to fuel the next phase of income growth, and higher FII inflows will maintain a liquidity surplus, lending flexibility. Will be.
“We feel we are only past the halfway mark in the current bull market. The peak of the bull market for India is likely still in the future and EM indices have some way to go before the weighting peaks. And distance can be.”
Morgan Stanley maintained India as its top and second favorite in emerging markets after Japan in the Indo-Pacific region.
Among stocks, it prefers cyclicals over defensives and large caps over small caps. And across sectors, it is ‘overweight’ on financials, technology, consumer discretionary and industrials, and ‘underweight’ on others. ($1 = 83.9690 Indian Rupees)
(Other than the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
