Mapping the Revenue Sources of India’s Equity Market

As MSCI Economic Exposure data shows, emerging markets (EM) generally had high economic exposures to companies with local revenue sources. The same is true for India, one of the fastest-growing economies in the world. Our analysis, as of Jan. 31, 2024, found that more than 70% of the revenues of the MSCI India Index’s constituents were earned in India.

Revenue sources can pinpoint likely beneficiaries of rewired supply chains

A closer look at the economic exposures of the MSCI India Index by Global Industry Classification Standard (GICS^®)¹ sectors and industry groups may provide insights into how the index’s geographic revenues were distributed.

Almost 94% of the information-technology (IT) sector, composed solely of software and services stocks and having an index weight of just over 13%, produced its revenues internationally. The result is that the sector had low active-return correlations with all other sectors. The largest source of these revenues was the U.S. at 57%, followed by Europe at 17%. More than 50% of the revenues from the health-care sector, whose index weight was just above 5%, were tied to international sources. The remaining nine sectors’ main revenue source was predominantly local.

The industry group with the second-highest international revenues (70%) is pharmaceuticals, biotechnology and life sciences with an index weight of 4%. The industry group with the next-largest exposure to international revenue sources (44%) was telecommunication services and had an index weight of 2.8%.

Countries, sectors and industries that combine a higher proportion of international revenues and a manufacturing orientation tend to be more export-driven and are likely beneficiaries of the trend toward deglobalization. In previous research, we illustrated potential ways to evaluate how industries and companies could be impacted by the rewiring of global supply chains, including an indexed approach that considers thematic and structural opportunities.