MSCI India 2019 returns enter negative territory

ET Intelligence Group: Returns from the MSCI India index — a dollar denominated benchmark for global investors to compare their investment yields here and overseas — slipped into negative territory for 2019 after the recent declines in local equity assets.

This is the first time in six years that MSCI India posted negative returns between January and July, according to data compiled from Bloomberg. Indian equities slumped in July when the Sensex returned -4.86 per cent, the worst for the month since 2002.

To be sure, the Sensex is still up 3.25 per cent year to date.


MSCI India index dropped 0.8 per cent since the beginning of 2019 compared with gains of 8 per cent and 17 per cent, respectively, for the MSCI EM index, the gauge for developing nations, and the MSCI World index that tracks assets of developed nations. Indian equities have largely under-performed the MSCI EM in 2019.

The index is a key benchmark for passive global funds that account for about 12-15 per cent of total assets under management of foreign portfolio investors (FPI). Underperformance of MSCI securities results in compression in the dynamic weight of any country. India now has dynamic weight of 9.4 per cent in the MSCI EM index, compared with benchmark weight of 8.4 per cent.

Indian equities have lost about $242 billion in market cap since the beginning of 2019. FPIs have sold about $2 billion worth of equities in July, the highest for any developing nation, although they are net buyers of $9.7 billion of assets year to date.