Kotak Mahindra Bank shares surged as much as 5.19 per cent to hit an intraday high of Rs 1,850 after its March shareholding pattern showed a minor drop in foreign institutional investors (FII) ownership triggering hopes that the stock could attract foreign flows going ahead.
"Kotak Mahindra Bank has released their March 2023 shareholding pattern and as per our shareholding analysis , the foreign holding has dropped down to 41.22% (down 1.47% QoQ) and this could result in foreign headroom moving to 25.05% versus 22.38% currently . The foreign headroom is just above the required threshold of 25% and now could result in change of adjustment factor to 1 from 0.50 currently," brokerage firm Nuvama Group said in a report.
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As the shareholding was released before the MSCI price cutoff date for May 23 review and thus the possible weight up in Kotak Bank could happen in May 23 review itself, the brokerage firm noted.
“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 buying of 32 million shares,” Nuvama Group said.
The stock has been languishing for quite some time and the MSCI weight up trigger could lead to strong momentum in the stock, Nuvama said.
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On technical charts also the stock is looking attractive and it can go up to Rs 1,950 in the near term, says Pravesh Gour, Senior Technical Analyst at Swastika Investmart
“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 1,650-1,700 zone, and the same has been confirmed on the breakout above Rs 1,750,” Gour said.
“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 1,750 is the important psychological support level below which we can expect the 1,700 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 1,950+ in the near-short term,” he added.
