Inclusion of HDFC Bank in MSCI India Index will lead to inflows of $2.8 billion: IIFL

HDFC Limited and HDFC Bank have reported the shareholding for the December quarter. However, on a merged basis, the consolidated shareholding for both the entities, the foreign room stands at around 17.25 percentage, which is above the threshold of 15 percentage for inclusion of HDFC Back in the MSCI India Standard Index with an adjustment factor of one.

In an interview with CNBC-TV18, Sriram Velayudhan, Vice President at IIFL Securities, spoke at length about the updated shareholding pattern and predicted a potential inflow of $2.5-2.8 billion for HDFC Bank. According to Velayudhan, these inflows are expected to happen at one go.

“If HDFC Bank is included with an adjustment factor of one, the stock is likely to see potential inflows of around about $ 2.5 to 2.8 billion,” he said.

Despite the large influx of funds, Velayudhan does not see any impact (post-merger) on domestic mutual funds, which have an average range of 7-8 percent.

Talking about a few stocks likely to get added in MSCI, he said Bank of Baroda and CG Power will be added to the MSCI Index, while Biocon and Aurobindo Pharma could be excluded.

However, there is currently no clarity on whether HDFC AMC will be added to the MSCI index. Velayudhan believes that the bank's inclusion in the index could attract more investors and potentially increase the bank's market value.

Overall, Velayudhan's predictions highlight the potential impact of MSCI inclusion on Indian banks and companies.

While some may see a boost in investment and market value, others may be excluded and see a decrease in financial performance. The addition of HDFC AMC in the MSCI will be closely watched by the investors and market experts.