FPI legroom in Kotak Mahindra Bank exceeds 25%, MSCI weightage may rise

Nifty index heads for correction

On Tuesday morning, attention will be paid to Kotak Mahindra Bank (KMB) shares because foreign portfolio investor (FPI) shareholding in the private sector lender has decreased over the three-month period ending March 2023.

The FPI shareholding in the company was 41.22 percent as of the most recent March quarter shareholding pattern, a decrease of 147 basis points from quarter to quarter.

The foreign investment room in KMB has increased to 25.05% from the previous level of 22.38% as a result of the steep fall in FPI holding.

The international headroom is only slightly above the necessary threshold of 25%, which could now lead to a modification in the adjustment factor from 0.50 to 1.

According to analysts at Nuvama Institutional Equities, “since the shareholding is revealed before the MSCI price cutoff date for the 23 May review and hence the likely weight hike in Kotak Bank could happen in the 23 May review itself.”

Kotak Mahindra Bank could experience weight up led inflow to the tune of $690 million, which is almost 32 million shares buying (7 days average traded volume), the brokerage said. “If our shareholding calculations hold true and MSCI consider 41.22 percent as current foreign holding,” the brokerage said.

The MSCI weight-up trigger may result in high momentum for the stock, which has been lagging for a while, according to Nuvama, which also said that it is closely watching the event.

Shares of Kotak Bank
In Tuesday’s trading, Kotak Bank shares opened 4.74 percent higher at 1,842.75 each. KMB’s stock is now trading at a critical level. The short-term outlook for the stock will improve if it closes decisively over 1,753. At 1,800, it encounters instant opposition; at 1,936, major resistance.

But, it finds support right away at 1,694 and the next one at 1,642. Brokers anticipate a range of positive movement from the lender.

Brokerage Nuvama, meanwhile, has reaffirmed its earlier update and anticipates that Indus Towers and ACC would be excluded from the MSCI indices while Hindustan Aeronautics and Power Finance will be added.

Any day between April 17 and April 30 will serve as the cut-off date for the global market cap. According to IST, the announcement would probably occur on May 12 at 3:30 am.