India’s largest private‑sector lender, HDFC Bank, witnessed its biggest foreign institutional investor (FII) sell‑off in years during the March quarter, with overseas investors cutting their stake by 3.6 per cent and selling shares worth nearly Rs 35,000 crore. The stock fell 26.2 per cent in Q4 FY26, its worst quarterly performance since March 2020, pushing FII ownership down to 44.05 per cent, the lowest level since June 2023, even as the bank reported steady loan and deposit growth in its fourth quarter business update and domestic institutional investors stepped up their holdings. Notably, the bank’s stock fell 1.2 per cent on Tuesday to hit an intraday low of 761 apiece.
The selling trend has now extended into a third consecutive quarter, underscoring that the move is not a one‑quarter blip. FIIs held a peak stake of about 48.84 per cent in June 2025, but have since pared holdings steadily to 48.38 per cent in September 2025, 47.67 per cent in December 2025, and down to 44.05 per cent by March 2026, amounting to a nearly five‑percentage‑point reduction over the past nine months. However, at the same time, DIIs stepped in as Mutual funds raised holdings to 29.54 per cent from 26.66 per cent.
Valuations of HDFC Bank have eased meaningfully following the recent correction, bringing the stock closer to long‑term averages. The bank’s price‑to‑book multiple has moderated to 1.84 times its one‑year forward book value, well below its five‑year average of 2.72 times.
HDFC Bank Q4 Business Update
HDFC Bank reported healthy growth in business volumes for the March 2026 quarter, with both loans and deposits recording double‑digit year‑on‑year expansion, the bank’s Q4FY26 business update showed.
The bank’s average advances under management increased 10 per cent year‑on‑year to Rs 29.64 lakh crore, compared with Rs 26.95 lakh crore a year earlier, while period‑end advances rose 10.2 per cent YoY to approximately Rs 30.57 lakh crore, reflecting sustained credit demand.
The Bank’s average deposits were Rs 28.51 lakh crore for the March 2026 quarter, a growth of around 12.8 per cent over Rs 25.28 lakh crore for the corresponding period.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
