Mutual Funds up their stake in private banks, HDFC Bank sees record steepest surge

Alongside this trend, the share prices of the bank too saw a jump.

Top private lenders saw a rise in their shareholding by mutual funds (MF), largely driven by robust growth opportunities in the sector. A Moneycontrol analysis of the top eight banks’ data and numbers showed a rising pattern from June 2023 to June 2024.

HDFC Bank, the largest private sector bank in the country, saw the highest jump in shareholding by MFs, from 17.6 percent to 24.83 percent. This shows a 723-basis-point rise. Next in line was Kotak Mahindra Bank where the MF shareholding at the end of June 2024 stood at 16.52 percent, up from 9.5 percent in June 2023, up by 702 bps. IndusInd Bank saw MFs increase their shareholding by 5.93 percent to 19.91 percent in a year, a change of 593 basis points.

Also read: Private banks face toughest June quarter in years with shrinking margins, poor asset quality, high slippages

ICICI Bank was the only bank to see a minor cut in shareholding by MFs. The funds cut their shareholding by a mere 0.04 percent and as of June 2024 had 29.18 percent shareholding in the bank.

Alongside this trend, the share price of the bank too saw a jump. For instance, Axis Bank’s closing share price on June 28, the last day of the reporting quarter, was at Rs 1,266.46, jumping from the closing price of Rs 987.54 on June 30, 2023. Shares of Federal Bank too jumped to Rs 177.09 apiece from Rs 126.5 apiece in the same period.

Barring Kotak Mahindra Bank and HDFC Bank, shares of all banks traded in the green.

It is also to be noted that during the period when the mutual funds increased their shareholding in these private banks, the Nifty Private Bank index jumped to 26,144.22 points from 22,953.30 points, or up 3190.92 points during this period.

While the latest quarterly results and numbers of the banks have shown a mixed trend, the private banking space at large remains robust with rising interest from the investor community. To give an example here, IIFL Securities in a report on July 12 showed that MFs purchased HDFC Bank shares worth over Rs 42,000 crore in the first half of 2024. This was significantly higher than the previous years, the report showed.

These private sector banks reported a mixed trend in their latest numbers for the first quarter of fiscal 2025. On a cumulative basis, private banks showed a 23 percent year-on-year (YoY) jump in net profit. The banks saw pressure on their net interest margins, too.

Banks have highlighted that there were some seasonal challenges in Q1FY25 due to rising heatwaves and stress on agri portfolio. But, going ahead, the banks are expecting growth and robust trends across the different parameters.