FPI legroom not enough for big MSCI boost, says Macquarie Capital

According to the latest June quarter shareholding data, the FII shareholding in HDFC Bank and HDFC Ltd has declined to 65.81 per cent and 67.7 per cent, respectively

A sharp fall in foreign institutional investor (FII) shareholding in both HDFC Bank and Housing Development Finance Corporation (HDFC Ltd) this year has increased the chances of the merged entity finding inclusion in the MSCI Index.

However, the legroom available may not be sufficient for a full-fledged entry of the merged HDFC Bank in the widely tracked global index.

In a note, Macquarie Capital has said that the foreign inclusion factor (FIF) — also called the adjustment factor — for HDFC Bank will remain 0.5x unless the FII holding falls sharply from the current levels.

According to the latest June