Is investors’ love affair with India ending?

In July 2024, India’s weight in the MSCI Emerging Markets Index, a leading gauge of stocks in developing economies, hit a record high of 19.99 per cent.

At the time, this was less than three percentage points below China’s weight, which at one point was as high as 43 per cent. Between 2022 and 2024, India was the darling of emerging market equity investors.

The combination of the country’s fast-growing economy, strong corporate earnings, the Covid-19 pandemic-induced boom in retail trading and...