Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Media reports indicate that the <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> merger with <a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN)</a> is expected to complete in 4-5 weeks.</li>
<li>There will be inclusions to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index</a>, <a href="https://www.smartkarma.com/entities/nifty-next-50-index" target="_blank" data-smartkarma-citation="entities:36053:1" rel="noopener">Nifty Next 50 Index</a> and <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index </a>and capping changes to the <a href="https://www.smartkarma.com/entities/nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">Nifty Bank Index</a> apart from changes to global indices.</li>
<li>While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.</li>
</ul>


Media reports indicate that the HDFC Bank (HDFCB IN) merger with HDFC Limited (HDFC IN) is expected to complete in 4-5 weeks.
There will be inclusions to the NIFTY Index, Nifty Next 50 Index and S&amp;P BSE SENSEX Index and capping changes to the Nifty Bank Index apart from changes to global indices.
While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.


HDFC/​​​​​HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

<ul>
<li>The March 2023 Rebalance results for the NIFTY broad market Indices were announced after the close on Friday 17th February 2023.</li>
<li>In my previous insights, I highlighted <a href="https://www.smartkarma.com/entities/pidilite-industries-ltd" target="_blank" data-smartkarma-citation="entities:20573:1" rel="noopener">Pidilite Industries (PIDI IN)</a> as a <em>potential</em> ADD for NIFTY 50 but it will not be added in March 2023. There are no changes.</li>
<li>However, for NIFTY 100 (&amp; NIFTY Next 50), 4/5 Expected ADDs and 5/5 Expected DELs were predicted correctly.</li>
</ul>


The March 2023 Rebalance results for the NIFTY broad market Indices were announced after the close on Friday 17th February 2023.
In my previous insights, I highlighted Pidilite Industries (PIDI IN) as a potential ADD for NIFTY 50 but it will not be added in March 2023. There are no changes.
However, for NIFTY 100 (&amp; NIFTY Next 50), 4/5 Expected ADDs and 5/5 Expected DELs were predicted correctly.


NIFTY Mar 23 Rebal: Quiddity Flow Expectations

<ul>
<li>In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.</li>
<li>The sharp price drops experienced by the Adani Group companies have resulted in a negative change in index flow expectations for some names.</li>
<li>However, some Adani Group companies could be experiencing <em>positive</em> index flows in the June 2023 rebalance due to some peculiar derivative-linkage requirements in the index methodology.</li>
</ul>


In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
The sharp price drops experienced by the Adani Group companies have resulted in a negative change in index flow expectations for some names.
However, some Adani Group companies could be experiencing positive index flows in the June 2023 rebalance due to some peculiar derivative-linkage requirements in the index methodology.


Quiddity Leaderboard for BSE/SENSEX Jun 23: Mixed Expectations for Adani Names. Some Lose. Some Win.

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/berger-paints-india-ltd" target="_blank" data-smartkarma-citation="entities:5431:1" rel="noopener">Berger Paints India (BRGR IN)</a> / <a href="https://www.smartkarma.com/entities/pidilite-industries-ltd" target="_blank" data-smartkarma-citation="entities:20573:1" rel="noopener">Pidilite Industries (PIDI IN)</a> are exposed to similar customers but different demand dynamics offering an opportunity to build an L/S trade.</li>
<li>The valuation premium commanded by PIDI over BRGR is not justified in spite of having a similar customer base, similar growth and capital allocation profile.</li>
<li>The Price ratio of the pair BRGR/PIDI has been trading in a tight range since September 2022 and is now showing signs of breaking out of the sideway trend.</li>
</ul>



Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an opportunity to build an L/S trade.
The valuation premium commanded by PIDI over BRGR is not justified in spite of having a similar customer base, similar growth and capital allocation profile.
The Price ratio of the pair BRGR/PIDI has been trading in a tight range since September 2022 and is now showing signs of breaking out of the sideway trend.


Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

<ul>
<li>With only 5 trading days to go in the review period, we see no constituent changes to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a> at the March rebalance.</li>
<li>
<a href="https://www.smartkarma.com/entities/pidilite-industries-ltd" target="_blank" data-smartkarma-citation="entities:20573:1" rel="noopener">Pidilite Industries (PIDI IN)</a> is the highest ranked non-index constituent, but its free float market cap does not exceed 1.5x the free-float market cap of <a href="https://www.smartkarma.com/entities/bharat-petroleum-corp-ltd" target="_blank" data-smartkarma-citation="entities:10222:1" rel="noopener">Bharat Petroleum Corp (BPCL IN)</a>. </li>
<li>We do not expect LTIMindtree (LTIM IN) to be added to the index in March post the merger between <a href="https://www.smartkarma.com/entities/larsen-toubro-ltd" target="_blank" data-smartkarma-citation="entities:2499:1" rel="noopener">Larsen &amp; Toubro (LT IN)</a> and <a href="https://www.smartkarma.com/entities/mindtree-ltd" target="_blank" data-smartkarma-citation="entities:7297:1" rel="noopener">Mindtree Ltd (MTCL IN)</a>. </li>
</ul>


With only 5 trading days to go in the review period, we see no constituent changes to the NIFTY Index (NIFTY INDEX) at the March rebalance.

Pidilite Industries (PIDI IN) is the highest ranked non-index constituent, but its free float market cap does not exceed 1.5x the free-float market cap of Bharat Petroleum Corp (BPCL IN). 
We do not expect LTIMindtree (LTIM IN) to be added to the index in March post the merger between Larsen &amp; Toubro (LT IN) and Mindtree Ltd (MTCL IN). 


NIFTY50 Index Rebalance Preview: No Changes Likely in March

India

Pidilite Industries Ltd. manufactures products which can be segmented into consumer products: art materials & stationary, publications, food & fabric care, car products and adhesives & sealants; specialty industrial products: industrial adhesives, industrial pigments, industrial & textile resins and leather chemicals.

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Pidilite Industries (PIDI IN)

HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

Media reports indicate that the HDFC Bank merger with HDFC Ltd is expected to complete in 4-5 weeks. There will be ad hoc inclusions to the...

Brian Freitas

NIFTY Mar 23 Rebal: Quiddity Flow Expectations

Most of the index changes were flagged very early in the reference period and have been in Quiddity's radar since October 2022.

Janaghan Jeyakumar, CFA

Quiddity Leaderboard for BSE/SENSEX Jun 23: Mixed Expectations for Adani Names. Some Lose. Some Win.

Based on current data, I do not see any changes for SENSEX. I see 6 ADDs/DELs for BSE 100 with Adani Names involved in both sides and I see 3 ADDs...

Janaghan Jeyakumar, CFA

Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an...

Pranav Bhavsar

NIFTY50 Index Rebalance Preview: No Changes Likely in March

We do not expect any changes in March since Pidilite's average FFMC does not exceed 1.5x the FFMC for BPCL. There will be an adhoc change prior to...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HDFC/​​​​​HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

Media reports indicate that the HDFC Bank merger with HDFC Ltd is expected to complete in 4-5 weeks. There will be ad hoc inclusions to the...

Brian Freitas

NIFTY Mar 23 Rebal: Quiddity Flow Expectations

Most of the index changes were flagged very early in the reference period and have been in Quiddity's radar since October 2022.

Janaghan Jeyakumar, CFA

Quiddity Leaderboard for BSE/SENSEX Jun 23: Mixed Expectations for Adani Names. Some Lose. Some Win.

Based on current data, I do not see any changes for SENSEX. I see 6 ADDs/DELs for BSE 100 with Adani Names involved in both sides and I see 3 ADDs...

Janaghan Jeyakumar, CFA

Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an...

Pranav Bhavsar

NIFTY50 Index Rebalance Preview: No Changes Likely in March

We do not expect any changes in March since Pidilite's average FFMC does not exceed 1.5x the FFMC for BPCL. There will be an adhoc change prior to...

Brian Freitas

HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications