HDFC Bank share price hit all time high; up 2.18% from previous day's close

Analysts expect more upside in the run up to August rebalance of MSCI index weightage

HDFC Bank’s share price closed at an all-time high on Wednesday on hopes that the private sector lender’s weightage in the MSCI Emerging Market index will be doubled.

The optimism was sparked after the foreign portfolio investor (FPI) holdings in the bank slipped below 55 per cent, the threshold set by the global index provider.

Its share price closed at Rs 1,768.35, up 2.18 per cent from the previous day's close.

Additionally, the American Depositary Receipts (ADR) of the bank have rallied 4.48 per cent overnight to close at $66.97.

According to the bank’s disclosure, as of June 2024, foreign shareholding in the bank is down to 54.83 per cent from 55.54 per cent in March 2024.

The current foreign shareholding in the bank is lower than 55 per cent needed to take the adjustment factor in MSCI from 0.5x to 1x and hence MSCI weight of HDFC Bank could double in August rebalance, a report by Macquarie Research said on Wednesday. HDFC Bank’s weight in MSCI India is 3.9 per cent and that could go up to 7.8 per cent, attracting passive inflow of around $5.2 billion, the report added.

HDFC Bank’s share price has gained by 19 per cent from June 4 onwards, ending its prolonged underperformance. The stock has outperformed the Nifty Bank Index and the Nifty benchmark index, which were up 13 per cent and 11 per cent respectively during the same period.

Analysts are expecting a further upside to the stock in the run-up to the rebalancing of its weightage in the MSCI Index in August. According to IIFL Alternative Research, HDFC Bank’s share price will gain 4–6 per cent in the run-up to the weight up event.