IndusInd Bank share price rallies over 3% amid stock market crash; inflows worth $300 million likely on MSCI weight hike

IndusInd Bank share price rallied more than 3% on Monday despite a sharp fall in the Indian stock market today, on expectations of significant passive fund inflows due to likely doubling of its MSCI weight. IndusInd Bank shares gained as much as 3.80% to ₹973.30 apiece on the BSE.

The December quarter shareholding pattern of IndusInd Bank showed that the Foreign Portfolio Investors (FPI) have reduced their stake in the private lender significantly to 46.63% from 55.53% in the September quarter, leading the foreign room to rise to 37%, exceeding the 25% threshold, with MSCI currently applying a half-float factor.

According to Abhilash Pagaria of Nuvama Alternative & Quantitative Research, the recent FII sell-off in IndusInd Bank leaves the headroom comfortably above 25% which could potentially lead to a doubling of the bank’s MSCI weight in the February 2025 review.

Based on the December shareholding, IndusInd Bank’s weightage in MSCI index is expected to double to 44 basis points from the current 22 basis points.

This weight increase is expected to attract inflows of approximately $250 million to $300 million in IndusInd Bank shares, which may impact the stock for 3-5 trading days, Nuvama Alternative Research said.

The upcoming MSCI rebalancing and the inflows will be adjusted on February 28.

IndusInd Bank Stock Price Outlook

IndusInd Bank share price has fallen over 28% in three months and more than 32% in six months. The private bank stock has dropped over 42% in one year.

“IndusInd Bank shares have underperformed other banking stocks since the past few months. The short-term trend in the stock remains sideways. The support is seen at ₹925 level, while the resistance is placed around ₹992 - ₹1,000 levels. We can see a directional move only after a breakout at any side from these levels,” said Ruchit Jain, Vice President, Equity Technical Research, Wealth Management, Motilal Oswal Financial Services Ltd.

According to Jain, a positive momentum in IndusInd Bank stock can be seen only if it breaks above the ₹1,000 level and until then the short-term trend will remain sideways.

MSCI Rejig Expectations

Five stocks have a high probability of migrating from the MSCI Small Cap Index to the Standard Index in the upcoming MSCI index review for February 2025.

Coforge, One 97 Communications (Paytm), Coromandel International, UNO Minda and Fortis Healthcare are the anticipated inclusions in the MSCI Standard Index, according to estimates by brokerage firm Motilal Oswal Financial Services (MOFSL).

Additionally, GE T&D India and Federal Bank shares hold medium to low probabilities of inclusion.

At 10:50 AM, IndusInd Bank shares were trading 2.90% higher at ₹964.80 apiece on the BSE. 

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