MFs Buy Rs 8,400 Cr More Shares In HDFC Bank Amid Soaring Market Volatility

Mutual funds have continued their bullish stance on HDFC Bank Ltd, with a notable increase in their holdings during the month of February. Following a substantial purchase of Rs 13,500 crore worth of shares in January, mutual funds acquired another Rs 8,400 crore worth of HDFC Bank shares in February, underscoring their confidence in the banking giant's long-term prospects.

According to data from ACE Equities, mutual funds bought approximately 6.01 crore shares of HDFC Bank in February, adding to the 8.83 crore shares purchased in January. As of February 2024, mutual funds collectively held around 142.27 crore shares of the bank, up from 136.26 crore shares in January. However, despite the increase in the number of shares held, the value of these shares decreased from Rs 2.15 lakh crore to Rs 2.02 lakh crore during the same period, reflecting market volatility and price fluctuations.

Thirty-four mutual funds out of the forty that invested in HDFC Bank raised their holdings in February, while five decided to reduce their interests. Notably, Quant Mutual Fund exited its position entirely, selling around 1.95 lakh shares. Among the buyers, ICICI Prudential Mutual Fund led the pack with the highest purchase of Rs 2,983 crore, followed by Nippon India and HDFC Mutual Fund with purchases of Rs 1,043 crore and Rs 917 crore, respectively.

SBI Mutual Fund remains the largest stakeholder in HDFC Bank, holding shares worth Rs 51,248 crore as of February 2024. HDFC Mutual Fund and ICICI Prudential Mutual Fund occupy the second and third positions with holdings valued at Rs 23,630 crore and Rs 22,128 crore, respectively. UTI Mutual Fund, Nippon India Mutual Fund, Kotak Mahindra Mutual Fund, and Mirae Asset Mutual Fund are some of the other significant players.

The surge in mutual fund investments comes despite a recent downturn in HDFC Bank's stock price, driven by disappointing earnings in January. Concerns regarding underperformance in net interest margins (NIM), sluggish deposit growth, and slower-than-expected retail growth weighed on investor sentiment following the bank's Q3 results.

However, several brokerages have since raised their target prices for HDFC Bank, citing optimism about its long-term prospects. Citi issued a 'buy' rating with a target of Rs 2,050 per share, indicating a 44 percent upside, while Morgan Stanley labeled HDFC as 'overweight' with a target price of Rs 2,110 per share. Analysts at both firms highlighted the bank's robust and sustainable franchise, anticipating profitable growth in the coming quarters.

Other blue-chip companies that saw substantial buying activity included HDFC Bank as well as Reliance Industries Ltd., Larsen & Toubro, Kotak Mahindra Bank, Indian Oil Corporation, Bharti Airtel Ltd., IndusInd Bank, and Tata Consultancy Services Ltd. In the mid-cap segment, Whirlpool of India and Kalyan Jewellers India experienced notable buying, while Sun Pharmaceuticals, NTPC, and Mahindra & Mahindra saw selling pressure.

The market remains dynamic, with investors closely monitoring company performances and adjusting their portfolios accordingly. As always, investors are advised to conduct thorough research and seek guidance from certified experts before making any investment decisions.

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