District Daily News

Change from China? India reaches a new high in the MSCI Global Standard index; this might lead to passive FPI inflows of $1.2 billion

<p>India on MSCI Global Standard index: According to MSCI’s most recent assessment from February, India’s weighting on the MSCI Global Standard (Emerging Markets) index reached a record high of 18.2%. Since November 2020, there has been a notable roughly twofold increase in this growth. This modification will take effect on February 29 after the market closes.</p>
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<p>Nuvama Alternative & Quantitative Research, citing a Reuters report, stated that the increase can be attributed to multiple factors, such as the adoption of standardised foreign ownership limits (FOL) by India in 2020, the ongoing surge in local equity prices, and the relative underperformance of other emerging markets, particularly China.<br />
India is now ranked second, only behind China, in the MSCI Global Standard index in terms of weightage.<br />
Nuvama further said that by early 2024, India might surpass a 20% weight in the MSCI Global Standard index with sustained participation from international portfolio investors and a constant flow of investments from domestic institutional investors.<br />
The fact that MSCI included five Indian equities in its Global Standard index during the February review—all without deleting any—shows how much the market is being trusted in India. On the other hand, the index provider added five new Chinese equities and deleted 66 old ones, suggesting that the global market environment is changing.<br />
Notably, Bharat Heavy Electricals and NMDC were added to the mid-cap index, while state-owned lenders Punjab National Bank and Union Bank of India entered the large-cap index. Furthermore, GMR Airports Infrastructure was shifted to the mid-cap index from the small-cap index.<br />
According to Nuvama Alternative & Quantitative Research, after the February review, India may see passive inflows of up to $1.2 billion from overseas portfolio investors into the standard and small-cap indexes.</p>