People's Bank of China now owns 1% in HDFC; co says PBOC held small stake earlier

“It is common for central banks to buy shares on behalf of the sovereign wealth funds of their respective countries," said Parekh. "HDFC stock is also owned by SAMA, the Saudi Arabian Monetary Authority (the country's central bank), purchased on behalf of their sovereign wealth fund. Many other sovereign wealth funds also own HDFC and other Indian stocks — funds such as the government of Singapore.

"There is nothing unusual or conspiratorial in these holdings; besides they are too small to matter — each about 1 percent or less."

Between the first week of February and the last week of March, HDFC's share price plunged 41 percent from a 52-week high of Rs 2,500 to a 52-week low of Rs 1,473. Its last traded price was Rs 1,701.25.

In 2014, PBOC had picked up stakes in many high profile Italian companies during the Eurozone debt crisis, when outlook on Portugal, Italy, Greece and Spain were the bleakest.

PBOC had picked up over 2 percent each in Italy's largest insurer Generali and car maker Fiat. It had also bought stakes in oil and gas firm Eni and utility major ENEL.

Prior to that, in 2007, PBOC had picked up a 0.46 percent stake in BG Group, Britain's third largest gas producer.

Central banks increased their holdings of equities beyond $1 trillion last year as they sought to diversify their reserves away from low-yielding bonds, according to a Bloomberg report, quoting a survey by research group OMFIF.

Monetary authorities boosted their allocation of equities to 10 percent of their reserves despite recent market volatility and a quarter of them said they plan to purchase more stocks in the next two years, the report further said.

During the quarter, other major foreign institutional investors Government of Singapore Investment Corporation and Invesco Oppenheimer Developing Markets Fund marginally cut their stake in HDFC.

GOSIC held 5.58 crore shares at the end of the March quarter, 16 lakh shares less than what it held at the end of the December quarter. Invesco held 5.74 crore shares at the end of the March quarter, 25 lakh shares less than what it held at the end of the December quarter.