Steady nominal GDP growth to raise India weight in MSCI EM index

In a changing geopolitical landscape, India appears to be on the right side of the global bloc. Daniel Morris, Chief market strategist, BNP Paribas Asset Management

- Dipti Sharma

If India continues to grow its nominal GDP at a low double-digit rate, it will support a gradual increase in its weight in the MSCI Emerging Markets Index, said Daniel Morris, chief market strategist at BNP Paribas Asset Management. India is already the second largest weight in this index, and a further increase in weight will help attract more benchmark funds to the country, he told Mint.

Drawing a comparison between China and India in the emerging markets, Morris said that, unlike China, which is more export-oriented,

India's growth is powered by domestic consumption, services, and a rising middle class, making it a potential beacon of stability and growth in a volatile global environment.

Edited excerpts:

How would you describe the current global sentiment? Do you think the tariff wars are behind us now?

We will know more in 90 days. Right now, the market seems to appreciate that we have moved into the negotiation phase. The original reciprocal tariffs were never meant to stay high; they were a way to get attention and bring countries to the table, which worked. We have already seen reductions and deals like the one with the UK are a start, with others in progress.

The US holds a strong negotiating position, as it is the world's largest market and a key destination for global exports. While India is less export-dependent, the leverage still matters. Ideally, we will see a positive outcome: slightly higher US tariffs, but lower ones elsewhere. We will have to wait and see how it plays out.

With tensions easing, do you think the expected near-term rate cut might now be pushed back?