HDFC Bank share price jumps over 3% to 52-week high. Here's why

HDFC Bank rose over expectations of high passive fund inflows amid likely weight increase in MSCI index.

HDFC Bank share price soared more than 3% to hit a 52-week high of ₹1,791.90 apiece in early trade today (June 3). This comes over expectations of high passive fund inflows amid likely weight increase in MSCI index. Latest shareholding pattern of HDFC Bank showed foreign institutional investors (FII) ownership in the bank dropped below 55%- expected to boost the stock’s weightage in the MSCI index which could lead to higher passive inflows.

The headquarters of India's HDFC bank is pictured in Mumbai. (Reuters)

As per Nuvama Alternative & Quantitative Research, FIIs holding in HDFC Bank below 55% could lead to a significant weight change from 3.8% to 7.2% to 7.5%. This could trigger inflows of $3.2 billion to $4 billion.

“According to base case calculations, the weight increase should lead to approximately $3.3 billion in inflows,” said Abhilash Pagaria, Head - Nuvama Alternative & Quantitative Research.

Brokerage firm Jefferies said that HDFC Bank’ jump in MSCI index weight could be positive near-term catalyst in stock. In medium term, strong deposit growth and improving NIMs should be key drivers, it said.