India surpasses China in world's largest investable stock index

India’s share in the free-float “investable” version of the MSCI All-Country World Index, which tracks nearly all globally tradable stocks, rose to 2.33 percent this month, overtaking China’s 2.06 percent, according to the report.

This shift positions India as the sixth-largest weighting in the index, dominated by US companies, and reflects the booming demand for Indian stocks.

At the same time, China’s economic struggles have led fund managers to reduce exposure to Chinese stocks.

India’s Nifty 50 index has hit record highs this year, driven by the country’s strong Gross Domestic Product (GDP) growth and a surge in domestic savings flowing into mutual funds.

Around $38 billion of domestic capital has entered Indian equities this year, surpassing the annual inflow levels of the past 16 years, Financial Times reported.

Indian companies have capitalized on the stock market surge, with high-profile initial public offerings (IPOs) from companies like Ola Electric and Bajaj Housing Finance.

More than $38 billion has been raised in India’s equity markets this year, the highest in Asia and more than twice the amount raised over the same period in 2022, reports Financial Times, citing Dealogic data.

Earlier this month, Indian stocks also overtook Chinese stocks in the MSCI Emerging Markets Investable Index, with a 22 percent share compared to China’s 19 percent.

However, China still leads India in the broader MSCI Emerging Markets Index when not adjusted for free float, though China’s share has fallen from 40 percent in 2020 to about 25 percent, while India’s has risen from under 7 percent a decade ago to nearly 20 percent, according to reports.

Despite these gains, US stocks still dominate the global market, making up two-thirds of the MSCI All-Country World Index, which had $4.6 trillion benchmarked to it as of early 2024.