Quant MF increases stake in HDFC Bank, boosting exposure in various schemes

Quant Mutual Fund, which is known for maintaining a significant underweight position in private banks, has increased its investment in HDFC Bank. Most schemes now have the private lender as one of their top two holdings.

Most schemes have Reliance Industries and Jio Financial Services as their top holdings. Banks carry the most significant influence in blue-chip indices Nifty50 and Sensex, with HDFC Bank having a sizable share.

Therefore, the poor performance of the stock significantly impacted the overall performance of these indices. During the last two out of three financial years, the majority of big-cap and banking sector funds have not performed as well as the benchmark indices due to difficulties in increasing deposits and challenges arising from the merger of HDFC Bank with its parent company HDFC.

The bank's performance decreased by 10 % in FY24 compared to the Nifty50's increase of almost 29 %

HDFC Bank is making progress in addressing its underperformance. Nuvama Institutional Equities suggests that one reason for the increase in stock price could be the anticipation of a higher weightage in the MSCI Standard Index during the August review.

The market is eagerly anticipating HDFC Bank's shareholding on June 24. The crucial factor to keep an eye on is when the FII ownership falls under 55 %. Base case calculations suggest that the weight gain will result in around $3.3 billion in inflows. Should the majority ownership support an increase in weight (which is more likely), the stock may experience another 10-15 % boost before the official announcement in August. If things don't go well, the stock might drop to approximately Rs 1,600, leading to potential interest from local funds, according to the brokerage.