HDFC Bank Shares Plunge 5% Amid Market Volatility: Funds with Largest Exposure to the Stock

Market Volatility: HDFC Bank's Resignation Affects Mutual Funds

On March 19, HDFC Bank experienced a significant stock crash of over 8 percent following the surprise resignation of part-time chairman Atanu Chakraborty. The resignation, citing differences over "personal values and ethics," led to a sharp sell-off of the stock, with HDFC Bank trading at Rs 810 on the National Stock Exchange by noon, down almost 4 percent from the previous close.

The sell-off's impact extends beyond individual stocks, as several index funds and exchange-traded funds have a high concentration in HDFC Bank. According to ACE MF data, the top exposures include:

• Baroda BNP Paribas NIFTY Bank ETF at 19.83%
• Axis Nifty Bank Index Fund and Axis NIFTY Bank ETF, both with over 19.7% exposure

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Actively managed mutual fund schemes are also expected to face pressure due to their high exposure to HDFC Bank. The top allocations include:

• Mirae Asset ELSS Tax Saver Fund at 9.71%
• Mirae Asset Large Cap Fund at 9.54%
• Quant Business Cycle Fund at 9.50%

Diversified active funds may also experience short-term volatility due to their sensitivity to stock-specific movements. A sustained decline in HDFC Bank shares can negatively impact returns. Despite the market's concerns, the bank's management has sought to reassure stakeholders, citing a strong leadership team and a focus on technology as key differentiators.