MSCI Rejig: India Weight Slips To 12.3% | What Does It Mean For Indian Markets?

Added: 2026-06-01

[00:00:00]Avinash Gorakshakar of Avinash Myntra Services joining in Avinash.

[00:00:03]You know, very good afternoon to you.

[00:00:05]Thanks so much for joining today. We'll also get to, you know, discussing about the auto sales estimate for the month of May. It's going to be an important number coming in from the first, which is on Monday. But just in terms of Avinash, what we saw in the last half an hour, extended pressure on the markets.

[00:00:20]Would you say that, you know, the net outflow number for FPIs continues to be a concern at this point of time because you saw sustained pressure as well. And also that MSCI rejig coming in. So those two factors you feel had a major impact and probably explains the fall in the Nifty 50 in the last 30 minutes.

[00:00:42]>> Yeah.

[00:00:44]Good afternoon, Puneet.

[00:00:45]See, Puneet, I think yesterday's fall in the market in the last half an hour was largely because of the MSCI rebalancing. You know, there was a lot of ETF selling pressure in the last 30 minutes. And most of these ETFs actually take the closing price which gets finalized in the last 30 minutes of trade. So I think you know, this was There were many trades this time. More than 12 to 15 companies where a lot of selling had to happen. And that was the key reason you saw a major sell-off on the Nifty yesterday. I don't think, you know, this is going to be repeated in the coming week. In fact, my sense is this could be a good opportunity for, you know, investors who want to buy into these quality names because finally this is just a one-off event. I don't think it's going to happen on the coming, you know, Monday or Tuesday. So in fact, you could expect a decent bounce, you know, from these levels. So I think there's nothing to worry for investors. Of course, you know, traders had a difficult time because this kind of selling was little more than what the street anticipated.

[00:01:43]But I think this kind of FI number was largely because of this MSCI rebalancing trade by the ETFs. So there's nothing to worry and there's nothing to panic.

[00:01:51]Fundamentally, I don't think the market looks weak and I think you could expect a reasonable good amount of bounce in the coming week, you know, specifically in these stocks and over the um next three, four days that the markets and the index could also bounce back quite well. So, nothing to worry. I think it's just a one-off which happened in the market over the weekend.

[00:02:08]>> Got it, Avinash. And also because you know the I think the selling figure by FPIs also is just materially higher than what we've seen, right? Almost 20 or 30,000 crores. So, would it be a correct assessment that you are baking this into the MSCI rebalancing as a key reason also it's no high frequency trading or any other particle at this point of time. Would that be a correct assessment?

[00:02:32]>> Yeah, it is a correct assessment as I told you. See, these ETFs wanted to do the rebalancing last 15 minutes itself. And there were many stocks this time, more than 14, 15 stocks. And typically this happens only in the last half an hour of trade. So, till 3:00 the market was doing pretty well. After 3:00, you know, the selling pressure started and it was accelerated because there was heavy selling by these ETF funds. So, my sense is that you know, this happened because they had to take a final you know, call. They had to actually exit those position and do the rebalancing by selling some stocks and buying the new stocks. So, obviously this is an event which I think was already known, but the intensity of this move was not known. So, my sense is that you know, since it's not going to be repeated every week, a lot of quality stocks also got beaten down because of this adjustment. So, I think you should see a decent bounce in the coming few days.

[00:03:23]>> Got it. And Avinash, you know, you know, of course because of paucity of time, just a quick couple of questions on the auto sales estimates as well for what we are expecting for you know, the two-wheeler side the growth is expected to continue, right? And if you can pull up that data on the side as well, almost an 8 to 26% kind of a growth that we are expecting, but double-digit growth expected in the two-wheeler makers. You're seeing for the four-wheeler side of things, Mahindra is expected to show an 8% growth almost, but Tata Motors continues to dominate in the four-wheeler space at this point of time.

[00:03:54]How are you viewing these current trends as well because the momentum for the two-wheelers expected to continue yet again and any preferred picks that that you have currently from the spaces?

[00:04:08]>> I think from the two-wheeler space we continue to be positive on Hero Motocorp. I think the rural market is expected to do well and I think most importantly most of the two-wheeler companies if you look at Bajaj, if you look at TVS, I think both the ice as well as EV vehicle two-wheeler market has been growing quite rapidly. So I expect a double-digit growth.

[00:04:28]My sense is the first quarter would be positive for almost all the two-wheeler companies and as far as you know the passenger car companies are concerned both Maruti and Hyundai should record double-digit growth.

[00:04:39]Maruti is a preferred pick here and of course in the commercial vehicle space we continue to like Ashok Leyland, Tata Motors. These are definitely good picks and of course M&M has been a all-time favorite. We believe that not only the tractor market, the utility vehicle market, but even the electric vehicle portfolio should do significantly well over the next 6 to 12 months. So I think auto should do reasonably well in the quarter one of FY27.

[00:05:01]The only question which is important is the margin pressure. I think because commodity prices have risen, there could be a little bit of margin pressure, but volume growth is strong and that definitely should take care of the margin pressure at least comfortably for this quarter.

[00:05:14]>> Got it. Well, of course we'll start to get those numbers from Monday morning. But Avinash, thanks so much for joining in and giving us that perspective both for MSCI as well as what's your top picks in the auto space as well.