Jefferies removed HDFC Bank from its portfolio, shares fell heavily after the resignation of the chairman.

HDFC Bank Share Price Analysis: Global brokerage firm Jefferies has completely excluded Indian banking giant HDFC Bank from its core portfolio, which has created panic in the market. This decision has been taken after the sudden resignation of the bank’s part-time chairman Atanu Chakraborty and serious differences related to ethics within the bank. Due to this major change, a decline of about 3 percent has been recorded in the bank’s shares on BSE, due to which there is an atmosphere of concern among the investors.

Jefferies’ portfolio changes

Brokerage strategist Chris Woods wrote his ‘Greed and Fear’ In the latest report it has been clarified that HDFC Bank has been removed from the Asia and Global Equity portfolio. In place of the bank, HSBC has now been included with 4 percent weightage, due to which there has been a slight decrease in the total weightage of the Indian market. Currently, India’s share in this portfolio has come down to 13 percent, which still remains slightly above the MSCI benchmark.

Chairman’s resignation and controversy

HDFC Bank has informed that its part-time chairman Atanu Chakraborty has resigned from his post due to deep differences over values ​​and ethics. He raised questions about some of the bank’s practices that were not in line with his personal ideals but did not elaborate. After this resignation, the bank took immediate action and appointed experienced Keki Mistry to the post of interim chairman.

Investigation and investor confidence

The bank management has decided to hire the services of reputed law firms to thoroughly investigate this entire controversy and the reasons behind the resignation. Experts believe that even though no wrongdoing has been proven yet, this development has significantly weakened the confidence of investors. According to Anuj Singhal of JP Morgan, due to this uncertainty, there may be heavy pressure on the bank’s shares in the coming time.

Possible action of RBI

According to various reports going on in the market, the Reserve Bank of India i.e. RBI can also investigate the sensitive matters related to this resignation at its own level. The regulatory body wants to ensure whether the rules of corporate governance are being properly followed within the bank. If any discrepancy is found in the investigation, future challenges for the bank may increase further.

fall in share prices

As soon as this negative news spread, HDFC Bank shares on BSE fell by almost 3 percent to a low of Rs 758, which is a shock for investors. There has been a huge decline of 14.3 percent in the bank’s share price in the last one month and almost 20 percent in the last six months. Currently the market cap of the bank is Rs 5.82 lakh crore while its 52-week low is Rs 741.05.

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Impact on Asian markets

Jefferies has reduced the weightage of India as well as Australia in its Asia Pacific portfolio by 2 percent while increasing the weightage of Taiwan by 4 percent. The move shows that the global firm is now giving more priority to other emerging markets than the Indian banking sector and increasing investments there. Market experts say that unless the conditions within the bank become clear, the chances of improvement in the stock are very less.