India is 11% of Emerging Markets. Here’s why that matters

India is only about 11% of MSCI EM, and the index is increasingly a bet on semiconductors. The MSCI Emerging Markets Index is a stock market index that tracks large-cap and mid-cap performance across 24 developing nations. In the MSCI Emerging markets index there are a total 24 countries, which are defined as developing nations and it consists of a total 1165 companies.

The Major Country wise Weightings are as follows : 

• Taiwan: ~28.9%

• South Korea: ~21.4%

• China: ~19.8%

• India: ~10.7%

• Brazil: ~4.0%

• Other (19 Countries): ~15.1%

Source: MSCI, 30 Sep 2026

Top 10 companies 

(source: MSCI, 30 Sep 2026)

When we take a look at the MSCI Emerging Market Index, Taiwan which is “The Tiny Taiwan” has a weightage of almost 30% and major stake lies with 1 company Taiwan Semiconductor Mfg Co and this company runs on one theme of semi-conductor.

South Korea has a weightage of 21.40% and there are 2 companies in top 10, Samsung Electronics and SK Hynix which form the majority. ( two companies as samsung appears twice)

China has a weightage of 19.80% and China has three companies in top 10, Tencent Holdings, Alibaba Group and China Construction Bank.

These top 3 countries hold approximately 70% of MSCI Emerging Market Index.

If we look at top 5 Indian companies, their weightages are as follows:

 (domestic weight = weight within MSCI India; global weight = weight within MSCI EM)

Taiwan and Korea have led the emerging markets in terms of returns generated. If we see the 5-Year Annualized Return Comparison (USD)

Let’s take a look at MSCI Country Index Valuations

India trades at a premium to most emerging market peers, close to Taiwan on forward earnings, yet returns have not been lucrative for FIIs.

Expensive Oil, Rupee depreciation and missing the AI theme on the whole makes India market less interesting for the FIIs. FIIs have net sold roughly ₹2.5-2.7 lakh crore (about $27 billion) of Indian equities this year, although they returned as net buyers in July and August before selling again in September.

The domestic backdrop is strong. In the April-June 2026 quarter GDP grew 7.8% , and Nifty 50 companies saw profit growth of 18%,(Motilal Oswal) the strongest in ten quarters and it was concentrated in a few large companies.Domestic investors continue to pour over Rs 32,000 crore a month into SIPs, thanks to that the markets are stable or markets would have been far weaker without it. 

“ It’s the darkest before the dawn”

India’s long term story still remains intact. A large domestic market, strong growth, deepening financialisation, rising household equity participation, and improved corporate earnings. 

The things that need to change are the pressure on Indian currency, the hottest trades of AI and semiconductor, and India becoming a small export hub.

Will India be able to achieve and maintain its growth, time will tell?

Takeaway: emerging markets are concentrated in a few themes, and India plays a different role from Taiwan and Korea. Diversification still matters.

Disclaimer:Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully. Past performance may or may not be sustained in the future.