HDFC twins up 6% on talks of inclusion of merged entity in MSCI index

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MUMBAI: Shares of mortgage lender HDFC Ltd. and HDFC Bank Ltd. surged on Friday, leading gains on Nifty 50 index, following reports that a change in MSCI Index rules related to M&As could lead to an early inclusion of the merged entity in the index.

As per reports, MSCI has done away with requirement of minimum foreign room.

HDFC Ltd rose 5.87% to 2,652 apiece, while HDFC Bank gained 5.5% to 1,609.

As of September quarter end , HDFC had foreign investor shareholding of 67.76% while HDFC Bank had 32.15% foreign shareholding.

After the announcement of HDFC Ltd.s merger with HDFC Bank in April, both the stocks had declined on concerns that the latter might be excluded from the MSCI index. HDFC fell from around 2,700 to a 52-week low of 2,026 on 17 June. HDFC Bank slumped from 1,600 to a 52-week low of 1,271.6.

The merger is expected to be completed by April-May 2023.

HDFC has a weight of 5.62% on the Nifty index, and HDFC Bank has a weight of 8.26%. 

As of writing , delivery as a percentage of traded volume stood at 60.4% for HDFC, while that of HDFC Bank was at 56.22%.

Meanwhile, HDFC Bank reported a 20% growth in its net profit for the September quarter at 106 billion, while net interest income grew to 210 billion. Parent HDFC Ltd. posted an 18% rise in net profit to 37.8 billon, with net interest income up 12.9% on year to 46.4 billion.

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