HDFC BANK SHARES TO LIFT SENSEX, NIFTY AHEAD? MSCI WEIGHT MAY DOUBLE IN AUGUST, ADD $3 BILLION INFLOWS IN 6 DAYS!
Domestic stocks have been on a solid bull run, and if we go by Nuvama Institutional Equities, HDFC Bank Ltd is set to give domestic stock indices such as Sensex and Nifty another boost. With the June quarter shareholding for HDFC Bank out, the weightage of the private bank may almost double MSCI Global Standard index in the August review, leading to $3.22 billion passive inflows on the counter in a span of six days, Nuvama Institutional Equities said in a note.
HDFC Bank accounted for 11.95 per cent weight in Nifty at the end of June.
Nuvama said HDFC Bank's June quarter shareholding has provided a relief to patient domestic holders, saying traders who took the plunge pre-emptively should see modest gains.
"The foreign holding in HDFC Bank has favoured the stock (25.9 per cent headroom against requirement of 25 per cent) , leading to a potential weight doubling in the MSCI August 2024 review. Currently, HDFC Bank's weight in the MSCI EM Index is around 3.8 per cent. Post-rejig, this could jump to 7.2-7.5 per cent, potentially bringing in $3.2 billion to $4 billion in inflows over 6 days (base case) , according to Nuvama Alternative & Quantitative Research," it said,
Could the weight increase happen in a staggered manner?
According to the current methodology, the increase happens all at once. If MSCI makes an exception, it will only be announced on August 13.
"As we’ve highlighted multiple times, we expect the stock to gain momentum (cross Rs 1,900 level) until the official announcement on August 13 (IST). Domestic funds, having bought HDFCB because of its reasonable valuation amidst an expensive market, should continue to hold," Nuvama said.
In conversations with FIIs, many have taken small punts, wary of whether FII selling would be significant enough to trigger the weight increase, it noted.
India's weight in MSCI EM now stands at 19.2 per cent and it is seen gradually crossing the 20 per cent mark. The August review cut-off will be between June 18 to June 31. The official announcement will be on August 13 (IST) with the adjustment taking place on August 30, 2024.
2024-07-03T01:48:11Z dg43tfdfdgfd