A brokerage firm report estimated that after the merger, foreign funds may sell about $150-200 million worth of the merged stock to adhere to index adjustments by MSCI. As a result, some investors may have have sold HDFC and HDFC Bank stocks ahead of the adjustments since such a decision will lead to bunched-up selling by index funds and ETFs, market players said.
The slide in the market came despite foreign fund buying and in the face of a resilient Indian market that gained in the last two weeks despite weak global cues.
On Friday, HDFC Bank closed 5.9% lower while HDFC was down 5.6%. . On the other hand, buying was seen in ICICI Bank, ITC and some other stocks that are constituents of the MSCI index. The global index provider (MSCI) also tweaked a rule to include the merged entity in its large cap global index and said that it would monitor the stock after the merger.
In Friday’s session, foreign portfolio investors (FPIs) remained net buyers at Rs 778 crore, taking the current month’s net inflow figure in stocks to above Rs 11,000 crore, data from CDSL showed. Domestic funds, however, were net sellers during the day, at Rs 2,199 crore, BSE data showed.
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