Nifty shake-up: Shriram Finance and NTPC in the spotlight

Shriram Finance, NTPC, and several other firms impacted by the latest rebalancing in the National Stock Exchange Nifty indices will be in focus when trading resumes on Tuesday. According to a note by IIFL Alternatives, Shriram Finance is expected to see inflows of nearly ~1,300 crore (over three days of volumes), while UPL could see outflows of over ~700 crore (nearly five days of volumes) due to their addition and deletion from the Nifty 50 index. Among the public sector undertaking pack, NTPC (~750 crore), Power Finance Corporation (~600 crore), and REC (~600 crore) are expected to experience the highest flows. Analysts said stocks that are getting included or seeing an increase in weighting could outperform. Those getting excluded or seeing a reduction in weighting will underperform. Brokerages are recommending “basket trade” strategies based on this. The adjustment day for the rebalancing is on Wednesday.

FPI alert: Breaching the 3% mark

Under the newly introduced norms, foreign portfolio investors (FPIS) with over half of their domestic exposure in a single corporate group have to make additional disclosures. However, the market regulator has allowed certain exemptions to FPIS even if they breach the 50 per cent threshold. The Securities and Exchange Board of India has stated that FPIS will be allowed to hold more than 50 per cent in such group firms where the apex or parent firm has ‘no identified promoter’ as long as their composite holding of such FPIS doesn’t breach the 3 per cent mark. The National Securities Depository (NSDL) has been tasked with monitoring such breaches. Recently, it published the list where the composite holding of high single-group exposure FPIS has been breached. Ujjivan Financial Services and RBL Bank were the only two names on the list. Now, the FPI holding in these companies either needs to get realigned or overseas funds will have to furnish more details. NSDL has issued a list of 142 apex/parent companies with ‘no identified promoter’.