HDFC Bank Weight In MSCI Index May Rise After FII Selloff In Q4

The decline in foreign investors' holding in HDFC Bank Ltd. in the March quarter may lead to its increased weightage in the MSCI Index.

Foreign institutional investors' shareholding in HDFC Bank fell 4.5% in the quarter ended March 2023. Consequently, the current FII stake in the private lender stands at 47.83%, as compared with 52.30% in the December quarter.

This reduction in FII ownership would result in the private lender's weightage on MSCI index increasing, leading to an inflow of $2 billion, according to a brokerage.

The foreign portfolio investment outflow in financial services sector triggered in January and February can be linked to people's disappointment with HDFC Bank results.

Financial services recorded the biggest foreign outflows in January as overseas investors turned sellers of Indian stocks, said Samir Arora, founder of Helios Capital Asset Management (India) Pvt.

Overseas institutional investors offloaded $3,096 million, or Rs 25,744 crore, worth of stocks in January. This was the highest outflow in a year, National Securities Depository Ltd. data showed.

The overall market experienced a positive inflow of Rs 5,000 crore. Only the financial services sector saw a Rs 30,000-crore outflow, which resulted in a change in the overall flows, according to the data.