India vs China: A Shifting Landscape in Emerging Markets
India Surpassing China in Emerging Markets
India is anticipated to overtake China as the dominant player in the emerging markets index. According to Morgan Stanley, this shift could bring in even more foreign investments, fueling a significant stock market rally that currently remains in its early phases.
Current Market Dynamics
The South Asian nation's weightage in the MSCI emerging markets index has risen to 19.8% following a recent recalibration, approaching China's 24.2%. This increase reflects a substantial growth from just 9.2% in December 2020, while China's representation has diminished from 39.1%.
- Rising weightage indicates more absolute foreign capital inflows.
- Analysts note India is underweight in the average emerging markets portfolio.
- Foreign portfolio investors have acquired shares worth ₹531.78 billion ($6.33 billion) in 2024.
Growth Potential and Future Outlook
Recent sales from domestic institutions and mutual funds have propelled the Nifty 50 index to record highs, with a 16% surge this year outpacing many global markets, including China.
- Fiscal consolidation could drive private sector growth.
- Continuing foreign investment is likely to maintain market liquidity.
Morgan Stanley emphasizes that the current bull market for India may only be at its halfway point, suggesting that the Indian economy could see further gains in the future.
Investors are recommended to focus on cyclicals, large-cap stocks, and sectors such as financials and technology, which are expected to outperform others.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.