Street signs: High stakes on YES Bank hit FIIs, MSCI rejig, and more

An analysis of returns between the Nifty, the Sensex (indices with no sectoral cap) and the SX40 shows capping leads to only slight divergence in performance, at least in the short term

How caps impact index returns 

An analysis of returns between the Nifty, the Sensex (indices with no sectoral cap) and the SX40 (caps sectoral weight of 25 per cent) shows capping leads to only slight divergence in performance, at least in the short term. The year-to-date performance of all the three indices is identical — with each gaining little over 4 per cent. However, on a one-year basis, the Sensex, with the highest weight to the financial sector at over 40 per cent, performed the best with 6.5 per cent returns, while the Nifty and the SX40 have delivered 5 per cent. The comparison assumes significance as industry is currently debating on whether sectoral weight should be capped in benchmark indices to reduce concentration risk.

Samie Modak

High stakes on YES Bank hit FIIs

Foreign institutional investors (FIIs) who raised their stake in YES Bank in the March quarter seem to have been caught on the wrong foot. In the March quarter, FIIs raised their stake by 418 basis points to 40 per cent in the private sector lender. The shares of the bank have already fallen 40 per cent since April, with recent rating downgrades adding to the negative sentiment towards the counter. The fall in the stock price was triggered by the bank's weak operating performance in March quarter. The bank reported a Rs 1,507-crore loss due to a surge in provisioning for stressed loans, taking analysts by surprise.

Jash Kriplani

Traders eye MSCI rejig

Index provider MSCI as part of its half-yearly review is expected to announce changes to its India indices on Monday. An analysis done by ICICI Direct says RBL Bank, ICICI Lombard, SBI Life and HDFC Life are the stocks that could make it to the MSCI India index, which is tracked by passive exchange traded funds (ETFs) with assets of over $7 billion. “Some traders have aggressively built positions in key financial names on hopes of inclusion. They could profit from the trade if these stocks indeed are included as the announcement could lead to further buying,” said a broker.

Samie Modak