India's weightage in the MSCI Emerging Markets Index has slipped nearly to the Covid-19 induced pandemic period, dipping to the fourth spot from second position last year amid diversion of global outflows towards AI driven markets such as Taiwan.
Meanwhile, the South Asian country's peak came back in September 202, when India's weight declined to nearly 12% by May 2026 as against 9% in 2020. The reduction has largely been concentrated in BFSI, IT, and the FMCG vertical, which have a considerable representation in global indices
On the other hand, markets such as Taiwan, and South Korea had been driven by strong demand for AI, and semi-conductor-linked firms like Samsung Electronics, and TSMC, who have also been able to expand their global footprints.
Meanwhile, the Indian markets remain dominated by financials, consumer staples and IT services, with limited exposure to AI hardware or platform-driven businesses.
Since, India hit its peak levels in 2024, the equity market indices Sensex and Nifty 50 have declined 17.5% and 16%, respectively in USD terms. In the same period, China's Shanghai Composite has urged 50%, while Taiwan’s market has jumped 77% and South Korea’s Kospi has surged 124%.
The MSCI EM index has also gained 46%, while MSCI India has declined 16%. Market volatility in India has been driven by elevated valuations, continued foreign investor selling, subdued earnings growth and a weakening rupee. More recently, geopolitical tensions including trade-related uncertainties and the conflict involving the United States, Iran and Israel have weighed on sentiment.
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