India’s weight in global indices like MSCI and FTSE increased significantly, boosting foreign portfolio investments (FPIs). In the July-September quarter, FPIs injected over ₹86,000 crore, the highest in 15 quarters, due to India’s market outperformance and a Fed rate cut. This year, India’s MSCI index surged 26%, surpassing emerging markets’ 13% growth.

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A sharp rise in India’s weight in global indices, such as MSCI and FTSE, was driven by the strong performance of Indian markets and the Federal Reserve’s rate cut in mid-September. This prompted foreign investors to pour money into India, leading to over ₹86,000 crore in foreign portfolio investments (FPIs) during the September quarter—the highest in 15 quarters. In comparison, about ₹1.43 lakh crore was invested in Indian stocks by these investors in the December quarter of 2020.

In the first half of 2024, foreign fund inflows into Indian equities were moderate due to concerns about high valuations and tight US monetary policies. However, as the dollar weakened after the rate cut and India’s weight on global indices increased, foreign investors grew their local holdings.

The MSCI India index has climbed 26% this year, far outperforming the MSCI Emerging Market index’s 13% gain. This success has led to more Indian companies being included in both the MSCI EM and MSCI IMI indices, while Chinese stocks have seen their weights reduced. In the MSCI Emerging Market index, India’s weight has now risen to 20.7%, while China’s stands at 23.74%.

Foreigners have also been actively participating in India’s primary markets, investing over ₹65,000 crore in 2024, more than double the ₹33,000 crore invested in the secondary market.