India surpasses China to become 6th largest market in global MSCI IMI Index

India becomes 6th largest market in the global MSCI IMI index; surpasses China

In a significant milestone for its growing economic stature, India has officially surpassed China to become the sixth-largest market in the MSCI All Country World Investable Market Index (ACWI IMI). This global index, which tracks capital market performance across the world, reflects India’s increasing importance on the international investment landscape.

As of August, India’s weight in the MSCI ACWI IMI stood at 2.35%, surpassing China’s 2.24%. Notably, India trails France by a mere three basis points. This marks a dramatic shift in market dynamics, with China’s weight in the index declining by half since its peak in early 2021, while India’s representation has more than doubled during the same period.

Earlier this month, India’s robust economic fundamentals propelled it to the forefront of the MSCI Emerging Market (EM) IMI, making it the largest weight in that index as well.

The MSCI Emerging Markets IMI encompasses large, mid, and small-cap stocks across 24 emerging market countries, further highlighting India’s escalating significance in global markets.

The increase in India’s market weight is attributed to several factors, including a high growth rate, a stable government, reduced inflation, and disciplined fiscal policies. According to a note from global brokerage Morgan Stanley, “India will continue to gain share due to market outperformance, new issuance, and liquidity improvements.”

Jonathan Garner, Chief Equity Strategist for Asia and Emerging Markets at Morgan Stanley, emphasized India’s promising trajectory, noting that its nominal GDP growth rate is currently in the low teens—more than three times higher than China’s growth. Garner indicated that India remains the top preference for investors in the emerging market space and ranks as the second choice in the Asia-Pacific region.

Market analysts have pointed to improving macroeconomic indicators, including a notable 47% increase in foreign direct investment (FDI) during the April-June period of FY25, as evidence of India’s strengthening economic position. This progress positions India favorably in the eyes of global investors, reinforcing its status as a key player on the world investment map.

As India continues to solidify its economic foundations, its ascent in the MSCI ACWI IMI underscores its growing influence and attractiveness as a destination for global capital.

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