IndusInd Bank has seen a significant reduction in its Foreign Institutional Investor (FII) holdings during the second quarter, which has brought its foreign headroom close to a critical threshold, according to a report from Nuvama.
The FII holding in IndusInd Bank has dropped to 55.53%. This reduction has left the bank’s foreign room—essentially the gap available for further foreign investment—just below the critical 25% threshold, currently standing at 24.96%.
The report indicates that if FII holding drops by just 0.03 basis points, the foreign headroom will exceed 25%, leading to a potential doubling of the bank’s weight in the MSCI index. This could attract significant inflows, with estimates suggesting an amount close to $290 million.
This development follows a period of FII sell-offs, which has opened the door for a possible reweighting of the bank in key global indices. A reweighting could signal increased foreign investment and positive sentiment towards the stock. However, the situation remains contingent on further changes in FII holdings.
This increase in foreign headroom and potential MSCI reweighting presents a pivotal moment for IndusInd Bank and its investors
