India Surpasses China in MSCI Emerging Markets IMI, Promising $4.5 Billion Inflows

India has overtaken China in the MSCI Emerging Markets Investable Market Index (IMI), achieving a weight of 22.27% compared to China’s 21.58%. This shift could lead to approximately USD 4.5 billion in inflows to Indian equities. The change reflects stronger economic performance and market trends favoring India.

India has surpassed China in the MSCI Emerging Markets Investable Market Index (IMI), marking a significant milestone for the country's economic stature. According to estimates, Indian equities are expected to see inflows of about USD 4.5 billion (Rs 37,000 crore).

This week, Morgan Stanley reported that India's weight in the MSCI EM IMI has grown to 22.27 percent against China's 21.58 percent. The IMI takes into account a broader range of stocks, including large, mid, and small-cap sectors.

The increasing weight of India in the index stems from a stronger small-cap sector. Analysts suggest this shift is due to India's favorable macroeconomic conditions and outperforming equity market, bolstered by substantial foreign direct investments, low Brent crude prices, and significant foreign portfolio investment in the debt markets.