Top mutual funds sell over Rs 8,200 crore worth of HDFC Bank shares in August

Overall, 41 mutual funds held about 153.87 crore shares in HDFC Bank worth Rs 2.51 lakh crore in August, from 158.93 crore shares worth Rs 2.59 lakh crore in July.

Leading fund houses have sold substantial shares of HDFC Bank in August, totalling up to Rs 8,200 crore, leading to 23 out of 41 funds reducing their positions, data has showed. Among the sellers include names like Kotak Mahindra MF, Quant MF and SBI Mutual Fund.

In August, mutual funds sold around 5.06 crore shares, marking their first monthly selloff after seven consecutive months of buying. Between January and July, mutual funds were net buyers to tune of Rs 45,000 crore in HDFC Bank.

Kotak Mahindra Mutual Fund sold approximately 2.56 crore shares worth Rs 4,188 crore. Quant Mutual Fund exited its entire stake, selling 1.73 crore shares worth Rs 2,827 crore, while SBI Mutual Fund sold 68 lakh shares valued at Rs 1,110 crore. Other notable sellers included Aditya Birla Sun Life MF (Rs 718 crore), Invesco Mutual Fund (Rs 604 crore), Axis Mutual Fund (Rs 250 crore), and Tata Mutual Fund (Rs 233 crore).

Despite the selling, some funds are still bullish on India's largest bank by market capitalization. ICICI Prudential Mutual Fund emerged as the top buyer of HDFC Bank, acquiring 1.19 crore shares worth Rs 1,947 crore, followed by UTI Mutual Fund (Rs 251 crore) and Nippon India Mutual Fund (Rs 238 crore).

On the whole, 41 mutual funds held about 153.87 crore shares in HDFC Bank worth Rs 2.51 lakh crore in August, down from Rs 2.59 lakh crore worth of shares in July.

The reason behind selling of this magnitude by some mutual funds is not clear. HDFC Bank’s share has underperformed since the start of 2024, dropping 2.5 percent compared to a seven percent rise in the Nifty Bank index. Meanwhile, peers like State Bank of India rose 23 percent, ICICI Bank climbed 26 percent, and Axis Bank gained 10 percent since the start of the year.

In August, MSCI had announced that it will raise HDFC Bank's weightage in its Global Standard Index in two stages. The Foreign Inclusion Factor (FIF) for HDFC Bank will increase from 0.37 to 0.56, indicating that 56% of the bank's shares will be available for foreign investment.

This change boosts HDFC Bank's 'foreign room' to over 25%, allowing it to be included in MSCI at its full market-cap weight. The first adjustment will occur after the August index review. Due to HDFC Bank's significant weight in MSCI's India Index, an initial adjustment factor of 0.75 will be applied. If the foreign portfolio investment headroom stays above 20%, the factor will be increased to 1.0 during November's review.

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