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>We expect 5 changes to the <a href="https://www.smartkarma.com/entities/nifty-100-index" target="_blank" data-smartkarma-citation="entities:36051:1" rel="noopener">Nifty 100 Index (NSE100 INDEX)</a> at the March rebalance. The review period ends on 31 January and the announcement should be late February.</li>
<li>The largest impact of passive trading will be on <a href="https://www.smartkarma.com/entities/page-industries-ltd" target="_blank" data-smartkarma-citation="entities:4940:1" rel="noopener">Page Industries (PAG IN)</a>, <a href="https://www.smartkarma.com/entities/biocon-ltd" target="_blank" data-smartkarma-citation="entities:398:1" rel="noopener">Biocon Ltd (BIOS IN)</a>, <a href="https://www.smartkarma.com/entities/mphasis-ltd" target="_blank" data-smartkarma-citation="entities:7672:1" rel="noopener">Mphasis Ltd (MPHL IN)</a> and <a href="https://www.smartkarma.com/entities/abb-india-ltd" target="_blank" data-smartkarma-citation="entities:8703:1" rel="noopener">ABB India Ltd (ABB IN)</a>. </li>
<li>There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.</li>
</ul>


We expect 5 changes to the Nifty 100 Index (NSE100 INDEX) at the March rebalance. The review period ends on 31 January and the announcement should be late February.
The largest impact of passive trading will be on Page Industries (PAG IN), Biocon Ltd (BIOS IN), Mphasis Ltd (MPHL IN) and ABB India Ltd (ABB IN). 
There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.


NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In

<ul>
<li>Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.</li>
<li>One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.</li>
<li>Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.</li>
</ul>


Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.


AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

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Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>GLAND reported weak set of results in Q2FY23with consolidated revenue declining by -3.3% Y0Y due to weak performance in geographies such as US (3.0% YoY), India (-42% YoY) and RoW (- 3.0% YoY).</li><li>However, the company’s gross margins decreased by 120bps YoY due to one-time inventory write-off in Biosimilar CDMO of ~Rs 70 mn as per customer requirement.</li><li>Gross margin in RoW business declined to ~25% in Q2FY23 (vs. ~35% in Q2FY22) due to higher freight cost (included in COGS) as it airlifted critical materials.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

GLAND reported weak set of results in Q2FY23with consolidated revenue declining by -3.3% Y0Y due to weak performance in geographies such as US (3.0% YoY), India (-42% YoY) and RoW (- 3.0% YoY).However, the company’s gross margins decreased by 120bps YoY due to one-time inventory write-off in Biosimilar CDMO of ~Rs 70 mn as per customer requirement.Gross margin in RoW business declined to ~25% in Q2FY23 (vs. ~35% in Q2FY22) due to higher freight cost (included in COGS) as it airlifted critical materials.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Gland Pharma LTD - Intense Competition & Moderate Demand Leads to Business Loss

<ul>
<li>There was a lot of confusion around how NSE Indices would handle the <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> / <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 in its indices.</li>
<li>The market consultation seeks to change the index methodology to bring it in line with other index providers. That will result in much lower turnover than the existing index methodology.</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 a high probability add to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index</a> possibly in the first quarter of 2023. There will also be changes to <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>.</li>
</ul>


There was a lot of confusion around how NSE Indices would handle the HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger in its indices.
The market consultation seeks to change the index methodology to bring it in line with other index providers. That will result in much lower turnover than the existing index methodology.

Pidilite Industries (PIDI IN) is a high probability add to the NIFTY Index possibly in the first quarter of 2023. There will also be changes to Nifty Next 50 Index.


NIFTY Indices: HDFC/HDFCB Merger Driven Market Consultation

Thematic (Sector/Industry)

<ul><li>In Q2FY23, Pharma sector expected to be benefitted by factors like Currency depreciation, fall in raw material prices, low crude prices and correction in shipping prices could add to revenue growth and improvement in gross margins.</li><li>The Pharma universe under our coverage could report aggregate Revenue/EBITDA/PAT growth of 5.6%/-4.8%/-2.2% YoY.</li><li>Currency (Rs) has depreciated by 5.0% that could add major contribution to overall growth of 6.2% for last quarter.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

In Q2FY23, Pharma sector expected to be benefitted by factors like Currency depreciation, fall in raw material prices, low crude prices and correction in shipping prices could add to revenue growth and improvement in gross margins.The Pharma universe under our coverage could report aggregate Revenue/EBITDA/PAT growth of 5.6%/-4.8%/-2.2% YoY.Currency (Rs) has depreciated by 5.0% that could add major contribution to overall growth of 6.2% for last quarter.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

India

Gland Pharma Limited manufactures and markets small volume parenteral solutions.The Company offers injectables, including vials, ampoules, pre-filled syringes, lyophilized vials, dry powders, infusions, and ophthalmic solutions, and other active pharmaceutical ingredients. Gland Pharma conducts its business worldwide.

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Gland Pharma Ltd (GLAND IN)

NIFTY100 Index Rebalance Preview: Active Trading Before Passive Trading Kicks In

There should be 5 changes to the NIFTY100 in March. Quite a few names overlap with the potential AMFI reclassification of stocks which will result...

Brian Freitas

AMFI Stock Reclassification Preview (Dec 2022): A Bunch of Migrations

Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice...

Brian Freitas

Gland Pharma LTD - Intense Competition & Moderate Demand Leads to Business Loss

Gross margin in RoW business declined to ~25% in Q2FY23 (vs. ~35% in Q2FY22) due to higher freight cost (included in COGS) as it airlifted critical...

Axis Direct

NIFTY Indices: HDFC/HDFCB Merger Driven Market Consultation

NSE Indices' market consultation on merger/demerger treatment will significantly reduce index turnover. We expect the HDFC/HDFCB merger to complete...

Brian Freitas

Pharma Q2fy23 Preview

The Pharma universe under our coverage could report aggregate Revenue/EBITDA/PAT growth of 5.6%/-4.8%/-2.2% YoY. Currency (Rs) has depreciated by 5.0%

Axis Direct

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