India has made significant progress in narrowing the gap with China in MSCI's Global Standard index. The weight of Indian stocks in the index has reached an all-time high of 18.2%, while China's weight has fallen to 25.4% after the revision. This convergence of weights between Indian and Chinese stocks has been ongoing since August 2020. The revised weights will come into effect on February 29th. Analysts predict that India could surpass a 20% weight on the MSCI index by early 2024. As part of the revision, MSCI has added five Indian stocks to its Global Standard index and removed 66 Chinese stocks. This change is expected to attract up to $1.2 billion of passive foreign flows into India after the February review. Nilesh Shah of Kotak AMC emphasizes the importance of maintaining superior growth, governance, and green initiatives for India's financial markets to outperform the economic market. Engaging with regulatory authorities has increased India's weightage in the MSCI Index, narrowing the gap with China. India has moved from 8% to 18% in six years, while China is now at 25%. Shah believes that if India continues to maintain its economic growth, valuation, and green transformation, it has a good chance of reaching China's weight in the MSCI index over the next 5-6 years. However, if India's growth, governance, or green initiatives falter, the premium valuation enjoyed by the financial markets will not be sustainable. [9a0a3974] [ec151e27]