MSCI India Earnings Growth: Resilient Despite Global Shifts

Despite foreign investor sell-offs and global market reallocation, MSCI India's earnings growth remains robust. Jefferies forecasts the earnings to grow by 14% this fiscal, with a promising outlook through the next few years. Domestic resilience contrasts with international movements sparked by shifts in MSCI's Emerging Markets Index.

MSCI India companies are projected to achieve a 14% increase in earnings during the current fiscal year, as per the GREED & Fear report by Jefferies. The MSCI India Index, which tracks the performance of large and mid-cap segments in the Indian market, encompasses about 85% of the nation's equity space.

Jefferies anticipates a 10% EPS growth for FY26, which is expected to accelerate to 14% in FY27 and reach 17% in FY28, signaling a robust earnings trajectory over the coming years. The MSCI India earnings per share saw a turnaround from a 7% decline in FY20 to a staggering 41% growth in FY22. It's stabilized to 10% in FY23, rose to 18% in FY24, before moderating to 12% in FY25.

Despite the positive earnings forecast, India finds itself an 'inverse AI trade' in the global equity scene, partly due to its reliance on imported energy amid geopolitical tension, notably the US-Israel conflict with Iran. This led to significant net foreign selling of Indian stocks, amounting to USD 29 billion in 1H26, although there has been a rebound with USD 1.8 billion in net buying by July. This foreign market shift owes much to Korea's elevated role in the MSCI Emerging Market Index.