HDFC Bank trading volumes surge, over 22 crore shares change hands as MSCI rejig comes into play

HDFC Bank stock saw unusually high trading activity on 30 August, with more than 22.26 crore shares being bought and sold during the day -- nearly eight times its 20-day moving average volume. A bulk of the share sale happened during the final one hour, with nearly 20 crore shares sold after 2.30 pm. August 30 was the due date of MSCI indices August rebalancing.

Earlier, this month, global indices provider MSCI had raised the 'Foreign Inclusion Factor' for HDFC Bank stock from 0.37 to 0.56, opening up room for more foreign buying in the counter.

HDFC Bank share price fell following the share sale, giving up the day's gain. The stock was trading at Rs 1,630.25 near the closing bell, down 0.51 percent from the previous close.

MSCI, in its periodic review, partially raised the foreign inclusion factor on HDFC Bank stock. It is set to further raise the FIF in another tranche in its next review in November.

June’s shareholding data showed that the foreign ownership in HDFC Bank stood at 54.83 percent, falling below the crucial 55 percent-mark, qualifying it for the increased MSCI weight during the August 2024 rebalancing.

This level of foreign ownership allows for more than 25 percent ‘foreign room’ in HDFC Bank, a requirement for MSCI to consider the stock at its full market-cap weight. Some analysts expect the full inclusion in MSCI post November review to eventually draw in as much as $5 billion of foreign inflows into HDFC Bank stock.

Even at the partial raise, which is effective from August review, would likely bring in as much as $1.8 billion (~Rs 15,000 crore) worth of foreign buying in India's largest private bank.

It be noted that the final MSCI adjustment in HDFC Bank to raise the Foreign Inclusion Factor to 1 will occur in November, contingent on HDFC Bank’s FPI headroom staying above 20 percent.