Shares of HDFC Bank Ltd. India’s largest private lender are trading with modest gains on Friday ahead of the MSCI adjustments that will take place later in the day.

The stock was supposed to see an increase in weightage in the MSCI indices. However, MSCI announced that HDFC Bank’s weightage will increase in two tranches, while the street was working with an assumption that the weightage will increase in one go.

MSCI will maintain HDFC Bank in its indices with an increase in the Foreign Inclusion Factor (FIF) from 0.37 to 0.56 at the close of August 30, 2024.

The first adjustment will take place post the current rejig. Nuvama Alternative and Quantitative Research believes that the current adjustment will result in inflows worth $1.8 billion for HDFC Bank. Details of the second tranche is expected to be communicated during the next rejig in November, provided the FPI headroom stays at least 20%.

IIFL Alternatives is also anticipating inflows in the first tranche of the weightage increase for HDFC Bank to range between $1.5 billion to $1.8 billion.

HDFC Bank is subject to a Foreign Ownership Limit (FOL) of 74% and an adjustment factor of 0.5. Based on the latest available shareholding disclosure, the foreign room is above 25%.

Since the announcement of the MSCI weight increase, HDFC Bank’s shares have been largely flat and have not seen any significant movement.

As of closing on Thursday, shares of HDFC Bank are currently down around 12% from the record high levels of ₹1,794.