Street Signs: 200-day SMA for Nifty Bank, portfolio turnover, and more

200-day SMA for Nifty Bank: Line of least resistance?

Amid a global banking maelstrom, the National Stock Exchange Nifty Bank Index has decisively broken the 40,000 mark. The gauge for the performance of banking stocks — which also happens to have the highest weighting in the benchmark Nifty50 Index — last closed at 39,395. Technical analysts say the 200-day simple moving average (SMA) for the index holds the key. “For the Nifty Bank, 39,750, or the 200-day SMA, would act as a trend decider benchmark, below which the index could slip till 39,000-38,700. On the flip side, above the 200-day SMA, or 39,750, it could rally till the 20-day SMA, or 40,200-40,300,” says Amol Athawale, technical analyst (DVP), Kotak Securities.

Nifty Next 50’s rebalancing act: Win some, lose some

The five additions and subtractions in the National Stock Exchange (NSE) Nifty Next 50 Index — announced on February 20 — will become effective after the close of trading on March 29. Index trackers, too, will realign their holdings at the close of trade that day. “The largest passive buying impact will be on Page Industries, ABB India, and Canara Bank, while the largest selling impact will be on Mphasis, Bandhan Bank, and Biocon,” says Brian Freitas, a New Zealand-based analyst with Periscope Analytics. Interestingly, NSE Indices — a subsidiary of NSE — has also announced that the cumulative weight of non-futures and options (F&O) stocks in the Nifty Next 50 Index will be capped at 10 per cent (instead of 15 per cent). As a result, index trackers will have to buy far fewer shares than earlier anticipated of non-F&O stocks — noticeably four from Adani Group — that are part of the Nifty Next 50 Index.

Portfolio turnover: GQG trims ITC, India holdings

GQG Partners (GQG) in its Emerging Markets (EM) Equity Fund has drastically cut its exposure to cigarettes-to-hotels conglomerate ITC. At the end of December 2022, ITC was the fund’s second-biggest holding, representing nearly 6.5 per cent of the portfolio. The latest data available with Morningstar, a global mutual funds tracker, shows ITC no longer features in the top five holdings. Shares of ITC have gained 14 per cent year-to-date. Meanwhile, the GQG EM Equity Fund has increased its exposure to ICICI Bank to 3.68 per cent, making it the fifth-biggest holding. HDFC at 5.79 per cent is its largest holding. At the end of December 2022, India was the top weight for the fund, constituting nearly 34 per cent of the corpus. According to reports, the fund has reduced its India exposure to below 25 per cent.