HDFC Bank shares hit all-time high as MSCI weight likely increase seen positively by brokerages

Shares of HDFC Bank in Wednesday’s trade (July 3) marked an all-time high as global brokerages remain bullish on the counter as they factor in significant FII inflows on the back of likely increase in the weightage in the MSCI index slated to happen in August.

After hitting a fresh all-time high of Rs 1,791.9, shares of the lender at the last count traded with gains of 3 per cent at Rs 1,781.85 per share. 

In the previous day’s trade, shares of the country’s leading lender ended higher by 1.51 per cent at Rs 1,730.55 apiece on the BSE, while the BSE Sensex ended lower by 0.04 per cent at 79,441.  

The stock last year on July 3 scaled its all-time high levels of Rs 1,757.8 and since then has largely remained rangebound, while in the past month it has climbed nearly 10 per cent. 

Here’s how brokerages and  view the stock of HDFC Bank

Global brokerage Jefferies continues with its buy rating on the counter with a target of Rs 1,880, signifying probable gains of nearly 9 per cent from the previous close. In the June-ended quarter, foreign shareholding in the lender decreased from 55.54 per cent as of March 31 to 54.83 per cent. 

Nevertheless, the brokerage mentions that as MSCI’s threshold will increase the foreign inclusion factor (FIF) from 50 per cent  to 100 per cent, the lender will likely become eligible for jump in index weight at the next review due in August. And this is deemed as the positive near-term catalyst for the country’s leading private-sector lender. Furthermore, in the medium term, the company’s growth will be determined by strong deposit uptick and improving NIMs.

Similarly, another brokerage UBS sees HDFC Bank’s stock price to scale to Rs 1900, a potential upside of nearly 10 per cent. The brokerage believes that the foreign headroom is higher than the index cut off placed at 25 per cent, which makes the stock eligible for weight increase in MSCI Index. Besides, while the said weight increase is expected to result in an  estimated inflow of $300-650 crore, the same is partly factored in the recent gains.