IDFC First Bank - IDFC merger may lead to passive inflows of $39 million; check impact on other Bank Nifty stocks

The merger of IDFC First Bank and IDFC Ltd is expected to impact the weightage of banking stocks in the NSE indices, including the Nifty Bank index. The record date for the merger is October 10, and, hence, the NSE Indices will make the necessary adjustments during the last 30 minutes of trading session today, October 9.

After the merger, the weight of IDFC First Bank in the Nifty Bank index is likely to increase, while some other constituents of the index will experience a slight decrease in their respective weights, said Abhilash Pagaria of Nuvama Alternative & Quantitative Research.

According to Nuvama estimates, IDFC First Bank’s weight in the Nifty Bank index is expected to rise to 2.9% which will attract $39 million in passive inflows.

On the other hand, weights of HDFC Bank, ICICI Bank, State Bank of India (SBI), and others will fall in the banking index.

This is expected to result in outflows of $11 million from HDFC Bank shares, followed by $10 million outflows from ICICI Bank, and $4 million each from SBI, Kotak Mahindra Bank and Axis Bank shares.

IndusInd Bank is likely to see $2 million worth outflows due to decrease in its weight, while Bank of Baroda, Federal Bank, AU Small Finance Bank and Canara Bank will likely see $1 million worth outflows each.

IDFC First Bank - IDFC Merger

The merger of IDFC Ltd and IDFC First Bank is effective from October 1, 2024. According to the scheme of merger, IDFC shareholders will get 155 fully paid-up equity shares of IDFC First Bank Ltd. for every 100 shares held in IDFC Ltd as on the record date.

IDFC First Bank - IDFC merger record date is October 10, Thursday. The shareholders of IDFC Ltd will receive IDFC First Bank shares on or before October 31, 2024, subject to regulatory processes and clearances.

In light of the merger, the Futures & Options (F&O) contracts for IDFC Ltd., originally scheduled to expire in October, November, and December 2024, will now expire today, October 9. These contracts will be settled via physical delivery, with physical delivery margins applied to open positions as per exchange guidelines.

At 2:20 pm, IDFC First Bank shares were trading 0.21% lower at ₹72.99 apiece, while IDFC Ltd shares were trading 0.14% higher at ₹110.10 apiece on the BSE. 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.