Kotak Mahindra Bank’s FPI Shareholding Crosses 25% Mark, MSCI Weightage Likely to Surge

On Tuesday, the focus was on the shares of Kotak Mahindra Bank (KMB) as the foreign portfolio investor (FPI) shareholding in the private sector lender has decreased in the three-month period ending March 2023, potentially resulting in inflows of $690 million, equivalent to almost 32 million shares based on the 7-day average traded volume.

The March quarter shareholding pattern reveals that the FPI shareholding in the company decreased by 147 basis points quarter on quarter, currently standing at 41.22%. This decline has led to an increase in the foreign investment room in KMB to 25.05% compared to the current 22.38%.

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The foreign headroom has slightly exceeded the necessary threshold of 25%, which may result in an adjustment factor change from the current 0.50 to 1. This release of shareholding has occurred before the MSCI price cutoff date for the May 23 review, potentially leading to a weight up in Kotak Bank during the same review, according to analysts from Nuvama Institutional Equities.

According to the brokerage, if the shareholding calculations are accurate and MSCI considers the current foreign holding to be 41.22%, then Kotak Mahindra Bank could potentially experience inflows resulting in a weight up worth $690 million, equivalent to almost 32 million shares based on the 7-day average traded volume. The stock has been stagnant for a while, but the MSCI weight-up trigger may provide a strong momentum, and Nuvama has confirmed that they are closely monitoring the situation.

On Tuesday, Kotak Bank’s shares started trading 4.74% higher at ₹1,842.75 per share. The stock is currently at a critical level, and a definitive close above ₹1,753 would result in a positive short-term outlook. The stock’s immediate resistance lies at ₹1,800, with a significant barrier at ₹1,936.

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The stock also has immediate support at ₹1,694, with further support at ₹1,642. Brokerages anticipate the lender’s movement to remain within a range, leaning towards a positive bias.

In the meantime, Nuvama brokerage has restated its previous report, predicting the inclusion of Hindustan Aeronautics and Power Finance in MSCI indices and the exclusion of Indus Towers and ACC.

The global market cap cut-off date is expected to fall between April 17 and April 30, with the announcement slated for May 12 at 3:30 am IST.