NMDC a probable candidate for Nifty, MSCI, say bankers

The follow-on public offer of State-owned miner NMDC opened for subscriptions on Wednesday, comprising of a net offer to the public of 330,500,000 equity shares at face value Re 1 each and a reservation of 1,743,200 equity shares for purchase by eligible employees. The offer would close on March 12, 2010. The price band for the issue has been fixed at Rs 300-350 per share.

Bankers meanwhile are selling NMDC as a probable candidate for the Nifty and MSCI, reports CNBC-TV18's Mrinalini Krishna. Bankers are hopeful that the institutional activity in the issue will pick up on day three after a tepid response on day two.

Analysts consider the NMDC issue to be priced slightly at a premium compared to its domestic and global peers. Post the issue NMDC will have a free float of 10% and the free float market cap will be about USD 3-3.5 billion. This would make NMDC eligible for inclusion into the MSCI and the Nifty.

The MSCI quarterly review is slated to come up in May and the Nifty Semi Annual Review will come up in August where NMDC is likely to come up for discussion for inclusion. Index funds in FIIs who were looking to play the India story could well get attracted to the probable inclusion. Also, FIIs could make some alpha returns if NMDC gets included in the Nifty and the MSCI. NMDC can be a candidate for probable inclusion in the F&O segment if it is included in the MSCI and the Nifty.