HDFC Bank’s share price closed at a record high on Wednesday amid hopes that the retail lender’s weight in the MSCI Emerging Market index will double.
The optimism was fuelled after foreign investor (FPI) stake in the bank fell below 55 percent, the threshold set by the global index provider.
The stock price closed at Rs 1,768.35, up 2.18 percent from the previous day’s closing price.
Additionally, the bank’s American Depositary Receipts (ADR) rose 4.48 percent overnight to close at $66.97.
According to the bank’s disclosure, foreign shareholdings in the bank fell from 55.54 percent in March 2024 to 54.83 percent in June 2024.
The current foreign shareholding in the bank is below 55 per cent, which is required to bring the MSCI adjustment factor from 0.5x to 1x and hence HDFC Bank’s MSCI weighting could double in the August rebalancing, a Macquarie Research report said on Wednesday. HDFC Bank’s weighting in MSCI India is 3.9 per cent and that could go up to 7.8 per cent, attracting passive inflows of around $5.2 billion, the report added.
HDFC Bank share price has risen 19 percent since June 4, ending its long underperformance. The stock has outperformed the Nifty Bank Index and the Nifty benchmark index, which rose 13 percent and 11 percent respectively during the same period.
Analysts expect further gains in the stock ahead of the MSCI Index rebalancing event in August. According to IIFL Alternative Research, HDFC Bank’s share price will rise 4-6 percent ahead of the rebalancing event.
First print: 03 Jul 2024 | 17:34 IST