HDFC, HDFC Bank Share Price: HDFC and HDFC Bank fell up to 5% and 6% respectively, dragging domestic indices BSE Sensex and NSE Nifty. HDFC share prices hit a low of Rs 2,718, while HDFC Bank declined to touch an intraday low of Rs 1,626.2 per share. The HDFC twins tanked on suggestions made by a Nuvama report that following the merger of the private lenders, MSCI “intends to add HDFC BANK to the large cap segment of MSCI Global Standard Indexes.” This would not lead to any incremental inflows, instead would result in outflows of up to $200 million.
Based on their calculations, Nuvama projected that post the HDFC twins merger, the weight of the merged entity will reduce to 6.5% from HDFC Bank’s 6.74% weightage in the MSCI India Index currently. HDFC Bank will be added to the large cap segment of the MSCI Global Standard Indexes with a FIF of 0.37 after applying an adjustment factor of 0.5. This move will attempt to reduce the risk of reverse turnover while also reducing excessive volatility.
In an earlier report, Nuvama projected two likely scenarios. First, if the foreign room remained above 15%, the weight in the index would have doubled. This would lead to incremental inflows of $3 billion. Alternatively, MSCI could alter the methodology, which would result in less volatility. Out of the two scenarios, the MSCI has decided to go with the latter, and the methodology has been changed.
The fall in the share price of the HDFC twins dragged the benchmark indices. Nifty touched an intraday low of 18,104.9, down 0.8%, while Sensex tanked over 860 points from yesterday’s closing price. However, the indices have trimmed their morning sessions losses. HDFC on Thursday reported its fourth quarter earnings results. HDFC Ltd on Thursday announced its net profit for the fourth quarter at Rs 7,623.58 crore, up 18 per cent from Rs 6,458.51 crore in the same quarter last year.