The scheduled adjustments to Sensex and FTSE on September 15 are expected to lead to significant passive inflows for HDFC Bank, according to Nuvama Institutional Equities. The bank could see an impressive cumulative inflow of nearly $600 million, which is expected to provide a boost to the Nifty index. Other stocks, such as Axis Bank, State Bank of India (SBI), and Tata Motors (BO:TAMO) (NYSE:TTM), are also predicted to experience some inflows, albeit less substantial.
Nuvama revealed that HDFC Bank's inclusion in the FTSE will occur in three tranches, with each quarter witnessing around $500 million of inflow. Additionally, the Sensex's quarterly adjustment will lead to an additional $102 million inflow into the stock. These substantial inflows have been anticipated for several days now, but Nuvama still expects a 3-4% run-up.
In the case of the Sensex adjustment, other beneficiaries include Axis Bank ($10 million), Bharti Airtel ($9 million), SBI ($8 million), and Tata Motors ($3 million). However, some stocks may see marginal passive outflows. Bajaj Finserv is expected to have an outflow of $29 million, Infosys (NS:INFY) $22 million, and Reliance Industries $13 million.
Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal, emphasized the importance of HDFC Bank shares for Nifty hitting new highs. He noted that HDFC Bank shares hold around 15% weightage in Nifty index and any rally in these shares would be a positive sign. He suggested that for Nifty to hit a new lifetime high, HDFC Bank share price has to go close to ₹1,700 apiece levels.
Furthermore, Taparia highlighted that the Sensex, FTSE rejig could potentially fuel Nifty to a new peak in the near term. He pointed out that Reliance shares, which hold around 10% weight in Nifty, have been under selling pressure recently, but he expects a bounce back in the near term. This potential recovery, combined with the expected inflows into HDFC Bank and other stocks, could push the Nifty index to new heights.
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