As per the latest data, during the June 2022-23 quarter (Q1FY23), FPIs held 68.1 percent and 65.96 percent, respectively, in HDFC and HDFC Bank. Overseas shareholding is down 111/406 basis points (bps) and 260/412 bps on the quarter-on-quarter (QoQ)/year-to-date (YTD) basis in HDFC and HDFC Bank, respectively, noted the report.
This decline in stake by foreign investors has also weighed on their share price performance. On a YTD basis, HDFC and HDFC Bank have fallen 16 percent and 8.7 percent, respectively. In comparison, the Nifty Financial Services index has lost 7.7 percent in the same period.
Historically, the HDFC twins have been one of the most-favored stocks among the FPI community and the fall in FPI shareholding in the two stocks comes on the back of large FPI outflows from the domestic markets, stated the BS report.
On a YTD basis, FPIs have sold shares worth nearly $29.4 billion ( ₹2.25 trillion) from the equity market and $12.6 billion ( ₹1.1 trillion) during the June 2022 quarter. As per the report, financial stocks have accounted for a major portion of this selloff and if FPIs continue to liquidate from the domestic markets, HDFC Bank and HDFC could see a further fall in overseas holdings.
However, the report added that a silver lining in this could be that the selloff has created sufficient room for the two stocks to get included in the MSCI index post completion of their scheme of amalgamation which is less than a year away.
The minimum foreign room required to get included in the MSCI index is 15 percent and HDFC is already part of both the indices. But, on a standalone basis HDFC Bank is not eligible to get included in either of the two indices as it falls short of the threshold, the report informed. However, following the merger scheme, HDFC Bank will get added to the MSCI index, it added.