Shares of private sector lender Kotak Mahindra Bank surged as much as 5 per cent in Tuesday’s trade as analysts expect MSCI to increase the weigh of the bank stock its 23 May, 2023 review because of the drop in foreign shareholding in KMB.

The script of Kotak was trading at ₹1,845.85 per share, up 4.92 per cent on the NSE during noon deals.

The private lender’s foreign shareholdings dipped by 1.47 percentage points from December to 41.22 per cent in the March 2023 quarter, which analysts said could result in foreign headroom moving 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, according to brokerage Nuvama Institutional Equities.

The brokerage added that if its shareholding calculations hold true and MSCI considers 41.22 per cent as current foreign holding then Kotak Mahindra Bank (KMB) could see weight-up led inflow to the tune of $690 million which is almost 32 million shares buying (7-day average traded volume).

Kotak’s shareholding data for the March quarter has been released before the MSCI price cutoff date for 23 May review.

“The counter has been moving in a long consolidation range since 20 November on the weekly chart. Now, it has formed a double bottom formation at around ₹1,650-1,700 zone, and the same has been confirmed on the breakout above ₹1,750,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart Ltd.

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“The formation of the counter looks lucrative for the long-term investor, as it is trading above all important moving averages. On the downside, ₹1,750 is the important psychological support level below which we can expect the 1,700 level during any correction, while on the upside, ₹1,900 is acting as an important psychological level; above this, we can expect the level of ₹1950+ in the near-short term,” Gour added.