New Delhi: India’s weightage in the MSCI EM index outweighed that of neighbouring economic giant China after Morgan Stanley in a note stated that this move is expected to boost investment into the country. The brokerage said it expects a growing issuance pipeline to attract foreign portfolio inflows, which have been outbid by domestic investors.
Foreign institutions purchased Indian offerings worth Rs 7,200 crore in August compared to a whopping Rs 50,000 crore of purchases by domestic institutions.
Is higher weightage negative for India?
Citing China’s example, Morgan Stanley said the country’s performance was affected by a rise in weightage on the EM index. However, eventually, the country’s performance recovered in tandem with its performance. China’s performance peaked around October 2020, CNBCTV18 reported, citing the Morgan Stanley report.
This shows that the rise in India’s weightage in the EM Index may not necessarily affect inflows or larger market performance. Morgan Stanley added that apart from increasing India’s weightage in the EM index it was ranked 2 after Japan on the Asia Pacific index, according to the report.
Are India’s stocks overvalued?
Morgan Stanley stated there was some exuberance in Indian stocks, which may be hindering foreign inflows. According to the brokerage, a market correction will be positive for India by ensuring foreign inflows into multiple market instruments. To be sure, India’s market is yet to reach its peak in terms of the bull run. Moreover, its EM index weightage is also far from the peak, according to the brokerage.
India’s weightage in the MSCI Emerging Markets Index was raised while it was ranked number 2 on the Asia Pacific Index, according to Morgan Stanley. Here’s why Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
