HDFC Bank share price rose as FIIs holding less than 55% of the bank’s shares might result in a large weight change from 3.8% to 7.2% to 7.5%, potentially triggering $3.2 billion to $4 billion in inflows.
In early trade on Wednesday, HDFC Bank shares rose more than 3% to a 52-week high apiece on anticipation of significant passive fund inflows and an anticipated weight hike in the MSCI index. HDFC Bank shares surged by up to 3.54% to a new high of ₹1,791.90 on BSE.
The most recent HDFC Bank shareholding pattern shows that foreign institutional investors’ (FII) ownership in the bank has gone below 55%, which is projected to increase the stock’s weightage in the MSCI index, resulting in increased passive inflows.
According to BSE data, the FII holding of HDFC Bank as of June 2024 is 54.8%
According to Nuvama Alternative & Quantitative Research, FIIs’ holdings in HDFC Bank below 55% might result in a major weight change from 3.8% to 7.2% to 7.5%, potentially generating inflows of $3.2 billion to $4 billion.
A FII shareholding of less than 55% demands a 25% FII headroom, forcing the half-factor to be full.
“The delivery-based purchasing in HDFC Bank stock that has occurred in recent days can continue for a few more days, pushing the stock higher and giving it resilience. As HDFC Bank’s weight in the Nifty increases, ETFs and active funds will buy more delivery-based assets. Other high-weightage Nifty equities, including RIL, TCS, Infosys, and ICICI Bank, may suffer a minor setback, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The next MSCI EM Index rebalance will take place in August, with an official announcement scheduled for August 13.
“According to base case calculations, the weight increase should result in around $3.3 billion in inflows,” said Abhilash Pagaria, Head of Nuvama Alternative & Quantitative Research.
According to Jefferies, HDFC Bank’s increase in MSCI index weight may be a favorable near-term catalyst for the company. Strong deposit growth and improved Net Interest Margins (NIMs) should be significant drivers in the medium future, according to the report.
Meanwhile, HDFC Bank’s American Depository Receipts (ADRs) on the New York Stock Exchange (NYSE) climbed more than 4% overnight.
After a long period of stagnation, HDFC Bank’s share price has risen nearly 20% in the last three months, with the stock up more than 12% in one month.
At 9:30 a.m., HDFC Bank shares were up 2.28% to ₹1,770.00 on the BSE.
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