HDFC Bank Market Cap Crosses Rs 14 Lakh Crore for the First Time, Stock Closes 1% Lower - Read Now

Mumbai, November 28, 2024 – In a landmark achievement, HDFC Bank’s market cap briefly crossed the Rs 14 lakh crore mark for the first time in trading today. The banking giant's stock surged in the morning, but ended the day 1.06% lower at Rs 1,793 per share. This growth was driven by MSCI rebalancing and strong foreign institutional investor (FII) interest, although the stock lost up to Rs 15,000 crore in market value by the close of trading.

HDFC Bank Stock Performance Amid MSCI Rebalancing

In early trade, HDFC Bank saw its stock value reach Rs 1,825.90, up by 0.75% and briefly pushing its market capitalization above the Rs 14 lakh crore threshold. A total of 55 lakh shares were traded on the NSE till 10:30 AM, reflecting strong investor interest in the stock. The sharp uptrend came amid the MSCI rebalancing event, where HDFC Bank’s weightage in the MSCI indices was set to increase, triggering significant passive inflows.

As part of the MSCI November rebalancing, Indian equities are expected to receive a net $2.5 billion from foreign institutional investors. HDFC Bank was particularly in focus due to its weightage increase in the index, which is expected to bring in $1.88 billion in passive inflows. This adjustment was announced earlier this year and implemented in two stages.

HDFC Bank Market Capitalization Soars Despite Small Setback

The stock's market cap briefly surpassing Rs 14 lakh crore was a major milestone for India’s largest private-sector lender. HDFC Bank’s price-to-earnings (PE) ratio stands at 20.98x, indicating strong investor confidence despite the minor dip in the stock's value by the end of the day. Despite the overall market weakness, the performance of HDFC Bank continued to outperform broader indices like the Sensex, which has risen just 5.93% in the last six months, compared to HDFC Bank’s remarkable 17.94% gain over the same period.

The Nifty Bank index also saw a 0.12% gain, with 8 out of 12 of its constituents trading in green, showing positive sentiment towards India’s top private sector banks. However, HDFC Bank’s stock closed in the red, with a small decline of 1.06%, following the MSCI rebalancing news and foreign institutional selling.

FII Inflows and the Impact on the Indian Stock Market

The increased FII inflows into the Indian market, driven by MSCI rebalancing, are expected to boost the performance of major Indian stocks, including HDFC Bank. The increased weightage in the MSCI indices has positioned HDFC Bank as a key beneficiary of these global capital flows. The $1.88 billion anticipated to come into HDFC Bank from passive investments could drive further upward momentum in the stock, especially if the market remains positive in the short term.

However, despite this optimistic outlook, the stock market’s overall volatility, influenced by global economic trends and local market conditions, could still affect HDFC Bank’s performance in the coming weeks. Analysts advise caution, noting that while HDFC Bank has shown strong growth, market conditions could influence investor sentiment, particularly as the Union Budget approaches in February 2025.

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