Shares of Kotak Mahindra Bank Ltd jumped nearly 5% in Tuesday's trade on anticipation of the stock's weightage increasing in MSCI index and follow-on buying expectations. MSCI review is due on May 23 and analysts believe this could see weight doubling.
Kotak Mahindra Bank's foreign investor holdings decreased by 1.47 percentage points from December to 41.22 percent in the March 2023 quarter.
According to Nuvama Alternative Research, this may lead to a wider foreign headroom opening up and the stock weightage increasing in the MSCI index. The percentage of shares that are available to foreign investors in relation to the maximum permitted is known as foreign room. This must be at least 15 percent, according to MSCI.
The foreign room at Kotak Bank was 22.38 percent. According to Abhilash Pagaria of Nuvama Research, the room has expanded to 25.05 percent due to the decrease in foreign investors' holdings during the March quarter.
According to MSCI rules, the index provider applies an adjustment factor of 0.5 to reflect the actual level of foreign room when a security's foreign room is less than 25 percent and equal to or more than 15 percent. When it exceeds 25 percent, an adjustment factor of 1 is used.
On the technical front, according to Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One, positive news outflow on the stock has led a strong gap-up in the counter, and it's expected that the stock will continue with the positive trend but post a gap-up, dips should be considered for buying. ₹1800 seems an immediate support whereas in the near term, the stock may head towards ₹1950.
According to Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, the counter has been moving in a long consolidation range since November 20 on the weekly chart. Now it has formed a double bottom formation at around ₹1650-1700 zone, and the same has been confirmed on the breakout above ₹1750.
“The formation of the counter looks lucrative for the long-term investor, as it is trading above all important moving averages. On the downside, ₹1750 is the important psychological support level below which we can expect the ₹1700 level during any correction, while on the upside, ₹1900 is acting as an important psychological level; above this, we can expect the level of ₹1950+ in the near-short term,” said Gour.
The shares of the company hit an intraday high of ₹1,859 and low of ₹1,826. The stock's weekly average delivery volume is 59.32%.
According to a MintGenie poll, 38 analysts on an average recommend 'buy' rating on the stock.