Kotak Mahindra Bank may gain higher weightage in MSCI index! Here’s why

The stock may see an estimated inflow of upto USD 750 million.   

Shares of Kotak Mahindra Bank soared over 5 per cent on Tuesday after strong expectations of gaining weightage in MSCI index. With this, the stock is currently the top gainer from the Nifty 50 stocks. For the fourth quarter of FY22-23, the major lender’s foreign investors’ holding has slipped to 41.22 per cent in March 2023, which is 1.47 per cent lower than December 2023 quarter.   

This may result in a wider foreign room opening up and the stock gaining weightage in the MSCI index. Foreign room is basically the proportion of shares available to the Foreign Institutional Investors (FIIs) relative to the maximum allowed. MSCI requires this to be at least 15 per cent.   

Kotak Mahindra Bank’s foreign room is 22.38 per cent. With the fall in FII holding, the number has increased to 25.05 per cent. In such a case, the stock may see an estimated inflow of upto USD 750 million.   

In Q3 FY22-23, the large cap bank reported a strong growth of 31 per cent in net profit at Rs 2792 crore, while its net interest income (NII) rose 30 per cent to Rs 5653 crore along with improvement in NPAs. Meanwhile, the management expects the credit growth to remain robust in Q4. Interestingly, the bank has hiked FD rates by 25 basis points upto 7.25-7.50 per cent with the tenure between 2 and less than 3 years.   

Technically, the stock has been consolidating in the range of Rs 1636- Rs 2253 for nearly 3 years. The stock may see a strong upmove following the additional weightage in the MSCI index. Currently, the KOTAKBANK share price is trading at Rs 1842 level on NSE. Traders as well as long term investors should keep track of this stock in upcoming trading session.