Kotak Mahindra Bank slides ahead of exit from MSCI index

Kotak Mahindra Bank fell 1.93% to Rs 867.40 at 14:59 IST on BSE ahead of the bank's deletion from MSCI's Global Standard Index with effect from tomorrow, 8 July 2014.

On BSE, so far 99,412 shares were traded in the counter, compared with an average volume of 4.97 lakh shares in the past one quarter. The stock hit a high of Rs 881.75 and a low of Rs 854.65 so far during the day. The stock hit a record high of Rs 971.80 on 18 June 2014. The stock hit a 52-week low of Rs 588 on 28 August 2013. The stock had underperformed the market over the past one month till 4 July 2014, rising 2.62% compared with 4.66% rise in the Sensex. The scrip, however, outperformed the market in past one quarter, gaining 17.1% as against Sensex's 16.11% rise. The large-cap private sector lender has an equity capital of Rs 385.31 crore. Face value per share is Rs 5. Morgan Stanley Capital International (MSCI) decided to remove Kotak Mahindra Bank from its Global Standard Index after the stock reached its trigger limit on foreign institutional investor shareholding on 18 June 2014. The current limit on foreign shareholding in Kotak Mahindra Bank is at 37%. Morgan Stanley Capital International (MSCI) is a leading provider of benchmark indices and risk management analytics products. Many global mutual funds are linked with MSCI indices. Hence, deletion of a stock from the MSCI index leads to outflow of passive funds that use the MSCI index to benchmark their portfolios. On 30 May 2014, Kotak Trustee Company, a promoter group entity of the Kotak Mahindra Bank, sold 2.49 crore shares, or 3.24% equity, of the bank. After the sale of the shares, the shareholding of promoters in the bank has declined to 40.33%. Earlier in May 2014, RBI had ordered Kotak Mahindra Bank to bring down its promoter shareholding to 40% by 30 September 2014. Kotak Mahindra Bank will then have until 31 December 2016 to cut its promoter shareholding to 30%. As on 31 March 2014, promoters held 43.58% stake in Kotak Mahindra Bank. Among the promoter group, Uday Suresh Kotak held the largest stake of 39.76%. Kotak Mahindra Bank's net profit fell 6.7% to Rs 407.18 crore on 0.7% decline in total income to Rs 2552.96 crore in Q4 March 2014 over Q4 March 2013. Kotak Mahindra group is one of India's leading financial services conglomerates.