Motilal Oswal Nasdaq Q50 ETF jumps 41% in a week even as underlying US stocks fall. What is happening? — SkimNews
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- Motilal Oswal Nasdaq Q50 ETF market price jumped 41% (from ₹141.99 to ₹199.89) between 4 and 10 September, while the 50 underlying US stocks fell 2.6%, according to Value Research data
- The ETF's premium to NAV widened from 19.5% on 4 September to 83% on 9 September, settling at 72.8% on 10 September when NAV was ₹115.69 against a ₹199.89 closing price
- India's overseas investment limit for ETFs was reached in April 2024, blocking creation of fresh units and capping supply as demand spiked — trading volume hit ₹43 crore on 9 September versus an average daily volume of ₹1.4 crore
- ETF price-band rules changed on 7 September, shifting the reference from NAV two days prior to the previous day's traded price, letting each day's higher close set the next day's ceiling; Motilal Oswal Mutual Fund said the Q50 would have been capped at ₹142.60 on 7 September and ₹142.48 on 8 September under the old framework but actually closed at ₹169.87 and ₹199.89
- Other India-listed international ETFs are also trading above their NAVs due to the same unit-creation constraint, though the premium size varies across funds
Why it matters: Retail investors chasing the Motilal Oswal Nasdaq Q50 ETF on Indian exchanges are paying a 72.8% premium over the actual value of the US stocks inside it — a gap widened by a frozen supply pipeline (overseits limit reached April 2024) and a rule change that lets prior day's inflated price set the next day's ceiling, creating a feedback loop detached from underlying fundamentals.
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