MSCI Index

The MSCI World is a stock market index of 1,643’world’ stocks. It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is used as a common benchmark for ‘world’ or ‘global’ stock funds. This article will provide you with some important facts about the MSCI Index which can be useful for UPSC Mains GS 3 and Economics Optional of the IAS Exam.

What is meant by the MSCI index?

The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. The index includes securities from 23 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests. A related index, the MSCI All Country World Index (ACWI), incorporated both developed and emerging countries. MSCI also produces a Frontier Markets index, including another 31 markets.

Read about important indices from the links below:

What is MSCI Index India?

As per the official definition, the MSCI Index India is used to evaluate the performance of large and mid-cap segments of th Indian market. MSCI Global Investable Indexes (GIMI) Methodology is used for MSCI Index India. Around 85 percent of the Indian equity universe is covered by the MSCI Index India. There are four consitutents:

1. Largest
2. Smallest
3. Average
4. Median

As per the official MSCI Index India (As of 30th November 2020), the top 10 constitutents in the index are:

1. Reliance Industries
2. Infosys
3. Housing Development Finance Corp
4. ICICI Bank
5. Tata Consultancy
6. Hindustan Unilever
7. Axis Bank
8. HCL Technologies
9. Bajaj Finance
10. Maruti Suzuki India

The weights for each sector that is covered under the MSCI Index India as of Nov 2020 are given below:

1. Financial Sector – 26.24 percent
2. Information Technology – 18.43 percent
3. Energy – 15.33 percent
4. Consumer Staples – 10.59 percent
5. Consumer Discreationary – 8.48 percent
6. Materials – 7.92 percent
7. Healthcare – 5.23 percent
8. Industrials – 2.99 percent
9. Communication Service – 2.54 percent
10. Utilities – 1.98 percent
11. Real Estate – 0.26 percent

Related Links:

What is MSCI All Country World Index (ACWI)?

Performace of large and mid-cap segments of 23 developed and 27 emerging markets is measured using MSCI ACWI. There are around 3000 constituents in the MSCI All Country World Index. The developed markets that are covered in this index are:

1. Canada and US in America region.
2. 16 countries in Europe region (including Germany, France, Italy, UK.)
3. 5 countries in pacific region – Australia, Japan, Hong Kong, Singapore and New Zealand.

Note: India is an emerging market. The other emerging markets from Asia are listed below:

1. China
2. Indonesia
3. Korea
4. Malaysia
5. Pakistan
6. Phillipines
7. Taiwan
8. Thailand

Read about global indices and India’s ranking in the linked article.

Why MSCI is important?

It is considered to be one of the important indices that focus on  different geographic areas and stock types such as small-caps, mid-caps, and large-caps.

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