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MSCI Emerging Markets Index
India’s weight in the MSCI Emerging Markets Index drops from a peak of approximately 21% in September 2024 to about 12% by May 2026. The development is relevant now because India shifts from the 2nd largest constituent to 4th place in the index.
MSCI Emerging Markets Index and India’s Weight Decline:
| Dimension | Key Details |
|---|---|
| Index Name | MSCI Emerging Markets Index is a financial benchmark set by Morgan Stanley Capital International. |
| Coverage | The index tracks the equity performance of large and mid-cap companies across 24 developing nations or Emerging Markets countries. |
| Constituents | The index comprises 1,204 constituents. |
| Market Capitalisation Coverage | The index covers approximately 85% of the free-float market capitalization in each included country. |
| Investor Use | The index offers a widely used gauge for global investors. |
| Geographic Composition | The index is highly concentrated in Asian emerging economies, with top country allocations including China, Taiwan, India, and South Korea. |
| Top Sector Weights | The index is predominantly driven by Information Technology, Financials, and Consumer Discretionary. |
| Investment Route | Individual investors cannot purchase shares of the MSCI Emerging Markets Index directly and can obtain exposure through Exchange-Traded Funds and Index Mutual Funds. |
| India’s Peak Weight | India’s weight peaked at around 21% in September 2024. |
| India’s May 2026 Weight | India’s weight stands at 11.94% in May 2026. |
| India’s Rank Shift | India shifts from the 2nd largest constituent to 4th place in the MSCI Emerging Markets Index. |
| Country Weights Ahead of India | Taiwan has 24.84%, China has 23.05%, and South Korea has 18.69% weight in the index. |
| Taiwan’s Market Capitalisation Status | Taiwan has overtaken India and becomes the 5th most valuable stock market in the world in terms of market capitalisation. |
| India’s Sectoral Exposure | India’s equities are dominated by BFSI, IT services, and consumer staples, with limited exposure to AI hardware, semiconductors, and platform-driven tech. |
| FPI Turnover Share | Foreign Portfolio Investors accounted for approximately 69% of turnover during MSCI’s May 2026 rebalancing. |
| Reasons for FPI Outflows | Sustained outflows are linked to elevated valuations, slower earnings growth, and rupee weakness. |
| Highest-Weight Indian Companies | HDFC Bank and Reliance Industries have the highest Indian company weights in the index at 0.79% each. |