HDFC Bank, IndusInd in 'red flag' list on nearing foreign investment cap

Private sector lenders HDFC Bank and IndusInd Bank have been put in the so-called ‘red flag’ list, a system used for monitoring foreign portfolio investor (FPI) limits. A listed company enters the list when the available legroom for overseas investment is less than 3 per cent of the permissible limit. 

FPIs can invest up to 74 per cent in both HDFC Bank and IndusInd Bank. The current FPI shareholding in case of HDFC Bank is 71.3 per cent, while that of IndusInd Bank is 73. 1 per cent, data provided by depository firm NSDL shows. 

Shares of HDFC Bank are up 15 per cent, while IndusInd Bank has gained 31 per cent on a month-to-date basis. Market players said lot of foreign capital has flown into these two counters in recent weeks. 

Besides these two, Novartis India and Procter & Gamble Hygiene and Health Care are the only other companies in the red-flag list.  

Once a stock enters this list, incremental FPI buying is permitted on condition that overseas investors will divest their excess holdings within five trading days from the day of breach of the sectoral cap of 74 per cent.