Kotak Mahindra Bank share price jumps 5

Kotak Mahindra Bank share price jumps 5.6%; possible MSCI rejig may prompt $690 million equities buying

Kotak Mahindra Bank share price jumped 5.6% on Tuesday after a Nuvama Institutional Equities study of the bank’s latest shareholding pattern showed an increase in foreign headroom, possible weight up in MSCI indices, potentially leading to purchase of shares worth $690 million. The Nuvama report added that Kotak Mahindra Bank’s stock has been “languishing for quite some time and the MSCI (weight up) trigger could lead to strong momentum” in the scrip. The bank’s shares touched a high of Rs 1,859, up 5.6% from Monday’s closing price of Rs 1,759.3 per equity share.

According to Kotak Mahindra Bank’s Q4FY23 shareholding pattern, FPI shareholding in the bank declined 147 basis points over the quarter, to 41.22%. As a result of this decline, the foreign headroom is believed to have increased to 25.05% from the 22.38% at the end of December. “The foreign headroom is just above the required threshold of 25% and now could result in a change of adjustment factor to 1 from 0.50 currently,” added the report.

“Kotak Mahindra Bank shares began trading on the NSE with a 4% increase. The peak was Rs. 1859. We may anticipate that the MSCI liquidity event will result in a high momentum because the stock has lagged over the past year, and returns are negligible. Apart from this the appointment of a new chief executive officer will be a crucial turning point for the bank. Since Kotak Mahindra Bank was established in 1985, Uday Kotak has served as its CEO. However, as per RBI regulations, he must vacate his position at the end of the current calendar year. His tenure will end on January, 2024,” said Naveen Mishra, Senior Research Analyst – Equity Research, CapitalVia.

Bank Nifty index gained 1.1%, touching an intraday high of 41,287, in early trade on Tuesday as shares of Kotak Mahindra Bank lifted the banking stocks index. Public sector banks such as Bank of Baroda, SBI and Punjab National Bank also contributed to the gains.

“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 Rs. 1650-1700 zone, and the same has been confirmed on the breakout above Rs. 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, Rs. 1750 is the important psychological support level below which we can expect the 1700 level during any correction, while on the upside, Rs. 1900 is acting as an important psychological level; above this, we can expect the level of Rs. 1950+ in the near-short term,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.