FII stake in HDFC Bank falls below 55%, ADRs rally on likely inflows
HDFC Bank's shares surged, attracting billions, with FIIs reducing stakes. Analysts predict a significant increase in the MSCI index weight, potentially doubling inflows. The bank's NSE shares closed higher, reflecting positive investor sentiment.
American (ADRs) of rallied more than 3.5% in early trading on the Tuesday driven by expectations that its on the Standard Index could double in the August reshuffle.This anticipation follows a decline in ' stakes to below 55% in the June 2024 quarter. The change in MSCI weighting could potentially lead to an inflow of up to $4 billion from passive funds, analysts' estimates showed.
Legroom for foreign holding in the bank has now gone up to 25.9%, against the MSCI requirement of 25% for increasing the weighting.
"Currently, HDFC Bank's weighting in the MSCI EM Index is around 3.8%. After the rejig, this could jump to 7.2-7.5%, potentially bringing in $3.2 billion to $4 billion in ," said Abhilash Pagaria, head - Nuvama Alternative & Quantitative Research.
On the NSE, shares of the bank had closed at ₹1,728 after a gain of 1.34% on Tuesday. The shares have returned 10% in the past one month.
As of March-end, FIIs held a 55.54% stake in HDFC Bank, and a fall below 55% would allow an FII headroom of 25%, causing the half-factor to move to full, according to Nuvama Alternative & Quantitative Research.
The MSCI August review will be announced on August 13, and the adjustment will take place on August 30.
Source: Stocks-Markets-Economic Times
