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

Shares of Kotak Mahindra Bank (KMB) will be in focus on Tuesday morning as foreign portfolio investor (FPI) shareholding in the private sector lender has declined during the three-month period ended March 2023.

According to the latest March quarter shareholding pattern, FPI shareholding in the company stood at 41.22 per cent, down 147 basis points quarter on quarter.

Following the sharp decline in FPI holding, the foreign investment room in KMB has increased to 25.05 per cent as against 22.38 per cent currently.

The foreign headroom is just above the required threshold of 25 per cent and now could result in change of adjustment factor to 1 from 0.50 currently.

"As the shareholding is released before the MSCI price cutoff date for 23 May review and thus the possible weight up in Kotak Bank could happen in 23 May review itself," said Nuvama Institutional Equities analysts.

"If our shareholding calculations hold true and MSCI consider 41.22 per cent as current foreign holding then Kotak Mahindra Bank could see 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.

The stock has been languishing for quite some time and the MSCI weight-up trigger could lead to strong momentum, Nuvama said adding that it is continuously monitoring the event.

Kotak Bank shares

Shares of Kotak Bank opened 4.74 per cent higher at ₹1,842.75 apiece in Tuesday's trade. The stock of KMB is ruling at a crucial level. Another conclusive close above ₹1,753 will change the short-term outlook positive for the stock. It finds immediate resistance at ₹1,800 and the major one at ₹1,936.

On the other hand, it finds an immediate support at ₹1,694 and the next one at ₹1,642. Brokerages expect the lender to move in a range with a positive bias.

Meanwhile, brokerage Nuvama has reiterated its prior update and expects inclusion of Hindustan Aeronautics and Power Finance to MSCI indices and exclusion of Indus Towers and ACC.

Global Market cap cut-off date will be any day between 17 April and 30 April. The announcement is likely on 12 May, 3:30 am as per IST.