Street signs: Scarcity premium for banks, new pledging system & more

Buying on dips to propel Nifty

The Nifty gained 4.1 per cent in the August series, taking its total gains to 22 per cent in the last three series. This was the biggest consecutive three-series gain since 2009. Volatility continued to ease with the India VIX slipping 24 per cent to 18.9. The series saw a rollover of 79.9 per cent, with positive roll cost, suggesting longs were carried to the next series but with less aggression. This indicated a positive bias for the Nifty index, with the possibility of a range-bound movement. The index has to hold above 11,450 to witness an up-move towards 11,750 and 12,000 zones. On the downside, medium-term support is seen at 11,300 zones, said analysts.

Ashley Coutinho

Scarcity premium for banks

The investment legroom for FPIs in HDFC Bank, Kotak Mahindra Bank, and IndusInd Bank has reduced, according to index provider FTSE, which has dropped these stocks from some of its indices. This could lead to selling by ETFs. But, experts said in a scenario where sentiment towards banking stocks is positive, limited investment room can help drive stock prices. “The Street has turned bullish on banking stocks. Against this backdrop, if there is limited investment room in some of these stocks, which are FPI favourites, investors may pay a premium,” said an analyst. The limit for FPIs in most banks is 74 per cent. IndusInd last week was added to the "red flag" list as FPI investment neared this limit.

Samie Modak

Hitches in new pledging system

The broking industry faced teething issues with the new margin pledging system for retail investors. Many players reported delays in pledging and unpledging of their securities, leading to confusion over margin available to them for trading. Some investors had to grapple with understanding the new system, which involves visiting the website of a depository firm and entering password to authorise the pledge. Industry players say brokers, depositories, and clearing corporations have been working overtime to remove glitches. Sebi on Monday should take a call on further extension of the September 1 deadline.

Samie Modak