HDFC Bank shares were in green on October 4, driven by expectations of significant foreign inflows related to the upcoming MSCI rejig. Market experts anticipate that the Mumbai-headquartered private lender could witness inflows worth $1.8 billion in November, as part of the second phase of the weight increase in the MSCI indices.
The first round of inflows occurred in September. According to Nuvama Research, the second phase, slated for November 2024, is expected to bring in a further $1.8 billion, roughly equivalent to 93 million shares.
"For HDFC Bank, the long-awaited weight increase is finally happening. MSCI has made an exception by raising the weight with a lower adjustment factor, leading to an inflow of $1.8 billion. This translates to about 4.5 days' worth of trading impact during the August rejig. The second and final tranche is expected to come in November, as long as the foreign room stays above 20%, which should not be an issue," the report from Nuvama stated.
Recent data reveals that the bank's foreign room stood at 24.97 percent in September 2024, comfortably above the required 20 percent. This leaves HDFC Bank well-positioned to benefit from the forthcoming MSCI-related inflows.
The merger between HDFC Ltd and HDFC Bank has been instrumental in increasing the bank's weight in MSCI indices. Following the August review, the first tranche of inflows materialised in September, and now, $1.8 billion more is expected in the November adjustment.
Experts suggest that these inflows are part of a broader trend that could see India’s weight in the Emerging Markets (EM) Pack remain close to 20 percent. Nuvama’s Alternative & Quantitative Research team estimates that India could witness net foreign inflows of around $2.7 billion to $3 billion by the year-end. At this rate, India’s weight could potentially cross 22 percent.
At the close of the June quarter, Foreign Portfolio Investors (FPIs) held 44.56 percent of HDFC Bank. Some of the notable foreign investors include the Government of Singapore (2.10%), the Government Pension Fund Global (1.57%), and the Vanguard Total International Stock Index Fund (1.18%).
HDFC Bank reported that its deposits grew by 5.1 percent in Q2FY25 from the previous quarter, reaching Rs 25 lakh crore, while gross advances rose by 1.3 percent to Rs 25.19 lakh crore. Retail loans saw an increase of Rs 33,800 crore, while loans in the commercial and rural banking segment grew by Rs 38,000 crore. However, corporate and other wholesale loans fell by Rs 13,300 crore during the same period.
On October 4, HDFC Bank shares on NSE were trading at Rs 1,689.1 apiece on the National Stock Exchange, up 0.2 percent.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
