Shares of HDFC Bank, HDFC rise nearly 2% as FPI legroom expands

Shares of HDFC Bank and HDFC rose nearly 2 per cent on Wednesday following a drop in foreign portfolio investor (FPI) shareholding during the December 2022 quarter.

The latest shareholding pattern disclosure showed, the FPI holding in HDFC Bank declined 54 basis points (bps) sequentially to 67.38 per cent, while that in HDFC six bps to 65.64 per cent.

The move will help increase the investment legroom in the merged entity, which could lead to higher passive flows from global index trackers, said analysts.

“On a merged basis, foreign room stands at 17.25 per cent, which is above the limit of 15 per cent for inclusion of HDFC Bank (in MSCI index) with an adjustment factor of 1. In a scenario, where the room stays above 15 per cent in the run-up to the closure of merger, inclusion of HDFC Bank in the MSCI India standard index will pave for inflows of $2.8 billion in the stock,” said Sriram Velayudhan, Vice President and Head- Alternative Research, IIFL Securities.