In the era of Big Tech, the US stock market has become extremely top heavy in proportion to its market capitalisation. The index barometer , the S&P has decided to reduce the weightage of the market leaders proportionately in case they breach the size related thresholds in the key industry benchmark indices.
There has been a rising concentration risk over the last few years with a handful of bluechip technology companies hitting regulatory limits without any capping . Currently in the S&P index when any preset threshold is triggered or breached then the smallest of the group gets its weightage trimmed at first . But now with the changes in the S&P capping methodology taking effect from 20 August 2024 there will be many passive investment vehicles or ETFs particularly from the technology sector shuffling their holdings to reset their imbalance.
Analysts and large US brokerage houses expect that with this news there would be distribution of weightage more evenly across the index thereby reducing unnecessary turnover and tracking error . With the Dow Jones index futures showing a downtrend by over 150 points , it mirrored an expected weak opening for the US stocks during the Friday trading session . Here , the Indian stock market barometer , the S&P BSE Sensex tanked by over 1000 points or 1.24% to close at 81,183 levels while the Nifty 50 index dropped by 292 points or 1.17% to close at 24852 levels . In the broader market , the S&P Mid Cap index fell by 1.41% while the S&P BSE Small Cap index declined by 0.96% during the Friday trading session . On the other hand , the NSE Index VIX which is a gauge of the stock market’s expectation of volatility surged by 6.49% to close at 15.13 levels . The 10 year Indian bond yield benchmark advanced by 1.69% to touch the 6.97% yield.
The KEC International Ltd stock hit its 52 week high of Rs 1040 on Friday 06 , 2024 on the back of the company announcement that it had secured new orders of Rs 1423 crores for the design , supply and installation of 380kV transmission lines in Saudi Arabia . Only recently in July it had secured new T&D and cables orders worth Rs 1171 crores along with a 400 kV transmission line contract in the UAE and 380 kV in Saudi Arabia.
With all these orders , the total order book over the last six months have been in excess of Rs 11,000 crores . KEC International has posted a good Q1FY2025 with revenue of Rs 4512 crores on EBITDA margin of 6.5% at Rs 294 crores .
Profit after Tax increased by two times to Rs 88 crores on the back of highest ever order book in the T&D , renewables , railways and cables sector . With all financial metrics in place and a visible multi decadal opportunity in the infrastructure space , KEC International is expected to post all round decent performance over the next few years . The KEC International stock is currently quoting at Rs 992 on the bourses and can deliver a decent price appreciation in the medium term investment horizon .