HDFC Bank's Drop In Q1 FII Holding Paves Way For Higher MSCI Weight
The MSCI EM Index rebalancing is scheduled for August, with the official announcement set for Aug. 13 and the flows anticipated on Aug. 30.
HDFC Bank Ltd. has reported a reduction in foreign institutional investors' shareholding to 54.83% in the June 2024 quarter, down from 55.54% in the previous quarter. This change aligns with the MSCI Index's requirement of keeping FII shareholding below 55.5%.
The decrease in FII shareholding will likely trigger a significant increase in HDFC Bank's weight in the MSCI Index, according to the research firm Nuvama.
At the time of merger of HDFC and HDFC Bank, MSCI had assigned a lower weight for the merged entity. This was because the headroom for foreign investors was close to 15%.
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Currently, HDFC Bank's weight stands at 3.95%, but with the shareholding drop, it could rise to between 7.2% and 7.5%, Nuvama said in a note, adding that the adjustment is expected to result in substantial inflows, estimated between $3.2 billion and $4 billion.
The MSCI Index rebalancing is scheduled for August, with the official announcement set for Aug. 13 and the flows anticipated on Aug. 30.
Shares of HDFC Bank closed 1.3% higher at Rs 1,728 apiece. That is compared with a 0.07% fall in the country's benchmark NSE Nifty 50.
