The sudden exit of Atanu Chakraborty as part-time Chairman of HDFC Bank has not only wiped out ₹1 lakh crore in market-cap of the bank but also sent chills across the mutual fund industry, with top fund houses having significant exposure to the stock.
The top-10 mutual fund houses alone have invested about ₹90,000 crore in the shares of the country’s second largest bank.
The stock has already fallen 9 per cent so far in this month and touched a new low of ₹772 before closing at ₹800 on Thursday. The stock has seen a 15 per cent decline year to date.
Among MF schemes, most of the Nifty Bank Index Funds and ETFs have an exposure of 19.83 per cent to 19.70 per cent exposure in HDFC Bank.
Global financial services firm Macquarie stated that while fundamentals remain strong with healthy return on assets, investor sentiment will stay pressured until the board offers greater clarity. The brokerage also warned that uncertainty around CEO Sashidhar Jagdishan’s reappointment could further weigh on the stock.
Gibin John, Senior Investment Strategist, Geojit Investments said about 127 schemes have an exposure of over 5 per cent to the stock and any price movement in HDFC Bank will be reflected in the NAVs of these schemes.
While short-term investors with high equity allocation can consider booking profit, he added investments with a five-year horizon can stay invested.
Anuj Badjate, Managing Director, Badjate Stock & Shares, said shares of HDFC Bank has already corrected 20–25 per cent from ₹1,000 to ₹800 levels, suggesting that a significant portion of the current concerns has been reflected in valuations.
Stable asset
HDFC Bank continues to be one of the most institutionally owned and closely tracked franchises, with a historically stable asset quality profile and disciplined underwriting track record. At this stage, the development appears to be a sentiment and valuation adjustment, rather than a reflection of balance sheet stress, he added.
Earlier in the day, the Reserve Bank of India stepped in to assuage concerns and described HDFC Bank as a “Domestic Systemically Important Bank” with strong financials. RBI said based on its periodical assessment, there are no material concerns on record as regards to its conduct or governance.
Dr Ravi Singh, Chief Research Officer, Master Capital Services said while the fundamental attributes of the bank has not changed overnight, the comments coming from a senior official holds importance and introduces a degree of corporate governance scrutiny.
Though investors holding banking sector funds or thematic financial services funds could see volatility in NAV given the concentrated exposure, diversified funds will have a natural cushion against the blow, he added.
After retirement as Economic Affairs Secretary in 2020, Chakraborty was appointed as part-time chairman in May 2021 at HDFC Bank for three years and was reappointed in May 2024 through May 4, 2027.