Foreign portfolio investors reduce stake in HDFC Bank in March quarter

Foreign portfolio investors (FPIs) have reduced their stake in India’s largest private sector lender HDFC Bank during the March quarter, according to the latest shareholding data released by the company on exchanges.

At the end of the March 2024 quarter, a total of 2,663 FPIs held more than 314.19 crore shares in HDFC Bank. This formed 47.83% of the total public shareholding in the lender. This number was down when compared with the December quarter when a total of 2,835 FPIs held over 343.31 shares in the lender that formed 52.3% of its total public shareholding.

The reduction in stake by FPIs in HDFC Bank left more room for foreign investors to buy shares of the lender as the approved foreign ownership limit is 74%.

Data showed that foreign investor headroom in the bank rose to 24.95% at the end of the fourth quarter of the financial year 2023-24. However, it fell short by just 5 basis points from the MSCI requirement of 25% to increase a stock’s weight on the index.

Once the 25% mark is hit, MSCI would double HDFC Bank’s weightage in MSCI indices. This could result in massive inflows from passive investors.

On Friday, shares of HDFC Bank were trading 1.33% higher at ₹1,547.20 apiece on the NSE at 1:30 pm. The stock has fallen 9.3% year-to-date in 2024.

Yesterday, HDFC Bank reported 55.4% year-on-year growth in gross advances and 26.4% growth in deposits for the March quarter in its quarterly business update. The bank informed that its CASA ratio stood at around 38.2% as of March 2024 compared to 44.4% as of March 2023. The bank is set to report its earnings for the quarter ended March 2024 (Q4FY24) on April 20.