Why Kotak Mahindra Bank share price is skyrocketing today — explained

Nifty index heads for correction

In Tuesday’s trading, shares of private lender Kotak Mahindra Bank increased by as much as 5% because analysts anticipate MSCI would increase the weight of the bank stock in its 23 May 2023 review due to the decline in foreign ownership of KMB.

At noontime trades on the NSE, Kotak’s stock was trading at 1,845.85 rupees per share, up 4.92 percent.

According to analysts, the private lender’s foreign shareholdings decreased by 1.47 percentage points from December to 41.22 percent in the quarter ending March 2023, which might cause foreign headroom to increase to 25.05 percent from the current 22.38 percent.

According to stockbroker Nuvama Institutional Equities, the foreign headroom is slightly beyond the necessary level of 25% and might now cause a change in the adjustment factor to 1 from the present 0.50.

The brokerage noted that Kotak Mahindra Bank (KMB) might experience weight-up led inflow to the tune of $690 million, which is roughly 32 million shares buying, assuming its shareholding calculations hold true and MSCI deems 41.22 percent as current foreign holding (7-day average traded volume).

Before the MSCI price cutoff date for the 23 May review, Kotak’s shareholding information for the March quarter was made public.

“On the weekly chart, the counter has been trading within a significant consolidation range since November 20. Currently, it has established a double bottom formation in the 1,650-1,700 zone, and the breakout above 1,750 has reinforced this “the Swastika Investmart Ltd.’s Pravesh Gour, senior technical analyst.

“Given that the counter is trading above all significant moving averages, its creation appears profitable for long-term investors. On the upside, 1,900 is serving as a major psychological level; beyond this, we can expect the level of 1950+ in the near-short term. On the downside, 1,750 is the important psychological support level below which we may expect the 1,700 level during any correction “Added Information.