HDFC Bank witnessed a major block deal on August 30, where 4.69 crore shares were traded in multiple transactions totaling Rs 6,997 crore. The block deal coincided with the due date for MSCI indices’ August rebalancing, following the global indices provider’s decision to increase HDFC Bank’s Foreign Inclusion Factor (FIF) from 0.37 to 0.56 earlier this month. This adjustment has opened up more opportunities for foreign investment in HDFC Bank.
Despite the big deal, the share price of HDFC Bank fell, thereby undoing all the gains made during the day. It was trading at Rs 1,630.25, down 0.51 percent over the previous close with the market absorbing the impact of the share sale.
The partial increase in MSCI’s FIF for HDFC Bank is part of its phased approach, following which it is expected that another increment in the same would be announced in the next review, due in November. This after the foreign ownership in the bank stood at less than the critical threshold of 55 percent at 54.83 percent as of June. At this level of foreign ownership, HDFC Bank would qualify for increased weight in the MSCI indices during the August 2024 rebalancing.
The latest surge in the FIF is expected to bring around $1.8 billion, or about Rs 15,000 crore, foreign investment into HDFC Bank. Analysts believe that with full inclusion in the MSCI index after the review in November inflows for the bank can go up to $5 billion, provided the bank maintains headroom of more than 20 percent FPI.
This would imply that the last MSCI adjustment to bring the Foreign Inclusion Factor to 1 is likely in November, given the headroom of HDFC Bank’s FPI stays above 20 percent, thereby reflecting the stock’s market-cap weight fully in the MSCI indices.
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Source: Moneycontrol
News Desk
