Ambuja Cements: Two-Way Flows Expected Amidst Index Rejig

This week, Ambuja Cements is poised for significant market activity as it becomes the focus of both inflows and outflows, driven by changes in two major indices—FTSE and MSCI. While MSCI’s adjustments were announced earlier in August, FTSE followed suit after Gautam Adani’s recent sale of a 2.75% stake in the company.

FTSE Index Adjustment: Inflow Expected

FTSE has announced it will adjust Ambuja Cement’s float after the sale by the promoter entity, which is scheduled for August 29. This adjustment is anticipated to result in an inflow of $17 million, equivalent to 2 million shares. The impact of this adjustment is expected to be felt over a half-day trading session, bringing short-term positive momentum to the stock.

MSCI Quarterly Adjustment: Outflow Expected

Conversely, MSCI announced on August 13 that it would reduce the float for Ambuja Cements as part of its quarterly readjustments, which will take effect on August 30. This reduction is set to trigger an outflow of $75 million, or approximately 9.8 million shares, likely to affect the stock for about 3.5 trading days. A report commented on the potential for MSCI to reconsider its adjustment, stating, “Whether MSCI will make upward adjustments post the recent stake sale remains subjective; ideally, they should revise it later.”

Stake Sale by Holderind Investments and Subsequent Purchases

Holderind Investments, a holding entity for Ambuja Cements and ACC owned by Gautam Adani, sold 6.8 crore shares, or a 2.75% stake, in Ambuja Cements on August 23. The shares were offloaded at a price of Rs 625.5 per share via a bulk deal. Notably, GQG Partners acquired a 1.09% stake in Ambuja Cements through a block deal, with its Emerging Markets Equity Fund purchasing 1.71 crore shares, equivalent to a 0.69% stake.

Other Major Buyers in the Market

The block deal on August 23 also saw other significant investors increase their stakes in Ambuja Cements. Vanguard Emerging Market Shares Index Fund picked up 13.4 lakh shares, ICICI Prudential Mutual Fund acquired 31.9 lakh shares, Mirae Asset Mutual Fund bought 40.2 lakh shares, and Axis Mutual Fund purchased 12.7 lakh shares.

Stock Performance Overview

At 2 PM, Ambuja Cement shares were trading down by 1.10%, hitting a two-month low. Despite the recent correction of 9% in August, the stock remains up by 18.7% on a year-to-date basis.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.