Key Points
Mumbai: The merger of HDFC Ltd and HDFC Bank may attract a fresh inflow of nearly 25,000 crore ($3 billion) from overseas passive funds to the combined entity's shares, if the headroom remains above 15% for foreign investors to buy the shares, according to analyst estimates...
For a stock to remain on an MSCI index, international investors must have a minimum headroom of 15%, with an adjustment factor of 1, to purchase the shares on the public market...
"If the merged entity continues to have foreign room above 15%, then as per our preliminary calculations, the incremental inflow could be about $3 billion," said Abhilash Pagaria, head of Nuvama Alternative & Quantitative Research..
"If the merged entity's foreign room goes below 15% before the MSCI weightage consideration, then any incremental inflow is unlikely as the combined entity will remain in index with a 0.5 factor."..
As per the MSCI Global Investable Market indexes methodology, foreign room level for existing constituents will be reviewed every quarter coinciding with the regular MSCI index reviews..
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