Shares of HDFC Bank fell as much as 2% in Friday’s trade after index provider MSCI, dropped the private lender from its global standard benchmark index representing India (MSCI India). Reliance Power (2%), JP Associates (2.1%) and Reliance Capital (-2.5%) were the other three exclusions from the benchmark index even as the latter two were added in MSCI small cap index representing India.
After opening in red, HDFC Bank fell to an intra-day low of Rs 894 and was trading close to Rs 900 at about 1330 hrs IST.
Meanwhile, shares of Motherson Sumi and Zee Entertainment witnessed increased buying interest on getting included in the standard MSCI India index. Both these stocks rallied as much 3.2% and 4% before trading at moderate gains of 0.7% and 3.2% at Rs428.65 and Rs 365.90, respectively.
Post its semi-annual index review, MSCI made 44 inclusions in benchmark India small-cap index including Bluestar, City Union bank, J K Lakshmi Cement, Sterlite Technologies and Sundram Fasteners. It also dropped eight stocks including, Lanco Infratech, Radico Khaitan, Anant Raj, and Kailash Auto Finance which rallied anywhere between 1.5% to 4% in Friday’s session.
Earlier on Monday, Kotak Institutional Equities in a strategy note had highlighted a possibility of HDFC bank’s exclusion in the impending ETF re-balancing given that it is a FII-restricted stock. As of quarter ending September 2014, FIIs held 33.84% in HDFC bank and another 16.38% through depository receipts. Investors await a nod from Foreign Investment Promotion Board (FIPB) for an increase in the FII limit.
The domestic brokerage house also projected that Bharat Forge and Bharti Infratel may benefit from an expected supply-demand mismatch post re-balancing.