HDFC Bank's ADR premium plunges below 5%, lowest since June last year

Ample room for FPI investment, fundamental headwinds drive premiums down

The country’s most valuable lender HDFC Bank can perhaps no longer claim to be a favourite of foreign portfolio investors (FPIs).

Two data indicators, both somewhat interconnected, point to this — the diminishing premium of HDFC Bank’s American depositary receipts (ADRs) compared to local shares, and the ample investment opportunities available to FPIs in the domestic market.

The ADR premium has shrunk to below 5 per cent, down from over 30 per cent in March 2021, and even lower than recent levels. During calendar 2023, it averaged just over 12 per cent, but last week, it dropped to 4.8 per