India overtakes China in yet another global benchmark

India has overtaken China in another key global equity benchmark after surpassing it in the MSCI Emerging Markets Investable Market Index (IMI) earlier this month. The weight of Indian stocks in the MSCI AC World Investable Market Index (IMI) touched 2.35% on Wednesday as against China's 2.24% as the continued strong show by equities in Mumbai has led to more local stocks in the indices.

The MSCI AC World IMI includes large-, mid-, and small-cap representation across 23 developed markets (DM) and 24 emerging markets (EM), with 8,815 constituents.

The US leads the index with a 63% weight, followed by Japan (5.73%), the UK (3.51%), Canada (2.83%), and France (2.38%). India, currently in sixth place, is on course to surpass France and Canada in the indices, which will place it in the fourth position in the index, according to analysts.



"Indian equities have experienced a remarkable run, which has helped it surpass China in the MSCI AC World IMI," said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research.

India's strong rally over the past few months has significantly boosted its representation in MSCI indices.

The MSCI India Index has gained 23% this year, compared to a mere 0.3% gain in the MSCI China Index. The MSCI EM has risen 6.52% during this period. This outperformance has led to more Indian companies being added to both the MSCI EM and MSCI IMI indices while the weight of underperforming Chinese stocks has been reduced.

India's weight in the MSCI Emerging Market Index, the most widely followed by global investors, still lags that of China. The weight of domestic stocks in this measure is 20.7%, compared to China's 23.74%. India reclaimed the second spot in the index last November, overtaking Taiwan.

Pagaria said India could emerge as the leading country in the MSCI EM pack.

Last month, the MSCI India Domestic Small cap Index added 25 new stocks to its portfolio.