MSCI had in its August rejig announced the long-awaited weight increase for HDFC Bank. MSCI had made an exception by raising with lower adjustment factor, leading to an inflow of $1.8 billion.

In August, MSCI announced a two-tranche weight increase, contingent upon maintaining FPI headroom above 20 per cent. The August announcement initially disappointed the market, which had expected a one-time weight increase. Additionally, concerns arose over HDFC Bank's ability to maintain an FPI investment headroom above the 20 per cent threshold.

HDFC Bank's most recent shareholding shows foreign ownership limit at 55.51% from 54.83% at the end of the June quarter.

The first round of inflows occurred in September. According to Nuvama Research, the second phase, slated for November 2024, is expected to bring in a further $1.8 billion, roughly equivalent to 93 million shares.

HDFC Bank may see $1.8 billion inflows from MSCI weight increase, despite recent underperformance, with strong deposit and advance growth reported for Q2 2024.