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As of February 28, 2025, mutual funds collectively held a significant stake in IndusInd Bank, amounting to approximately 20.08 crore shares with a total market value of Rs 19,884 crore. This considerable investment underscores the prominence of IndusInd Bank within the portfolios of numerous Asset Management Companies (AMCs) and their respective schemes. However, the stability of this investment was recently challenged when shares of IndusInd Bank experienced a dramatic decline, plummeting by 26% on Tuesday. This sharp drop triggered a fresh 52-week low of Rs 720.50, raising concerns among investors and prompting a reevaluation of the bank's financial health. The immediate catalyst for this market turmoil was the revelation of an accounting discrepancy within IndusInd Bank's forex derivatives portfolio. The disclosure of this irregularity sent shockwaves through the financial community, leading multiple brokerage firms to downgrade the stock and substantially slash their target prices. These downgrades further exacerbated the downward pressure on the bank's share price, contributing to the overall market volatility. The impact of this situation extends beyond individual investors, directly affecting the performance of mutual funds with significant exposure to IndusInd Bank. With approximately 35 AMCs and around 360 schemes holding IndusInd Bank shares as of February 28, 2025, the implications of this market downturn are widespread and potentially far-reaching. The extent of the impact varies depending on the size and concentration of each AMC's investment in the bank. Some AMCs face more significant challenges than others, highlighting the importance of diversification and risk management in investment strategies.
A closer examination of the AMC landscape reveals a varied distribution of exposure to IndusInd Bank. Notably, five AMCs held investments exceeding Rs 1,000 crore, indicating a substantial level of confidence in the bank's performance prior to the recent events. Among these leading investors, ICICI Prudential Mutual Fund stood out with the highest exposure, holding approximately Rs 3,778 crore worth of IndusInd Bank shares, representing around 3.81 crore shares in its portfolio as of February 28, 2025. As the largest fund house based on assets managed, SBI Mutual Fund also held a significant position, with shares valued at Rs 3,047 crore, encompassing 3.07 crore shares in its portfolio. Following closely behind were HDFC Mutual Fund and UTI Mutual Fund, with investments of Rs 2,773 crore and Rs 2,447 crore, respectively. Nippon India Mutual Fund rounded out the top five, holding shares worth Rs 2,121 crore, comprising 2.14 crore shares in its portfolio. These figures demonstrate the considerable reliance of some of the largest mutual fund houses on IndusInd Bank as a component of their investment strategies. Beyond the top five, other AMCs also held notable positions in IndusInd Bank. Kotak Mutual Fund and Tata Mutual Fund held shares amounting to Rs 522 crore and Rs 517 crore, respectively, as of February 28, 2025. Quant Mutual Fund had around 30.77 lakh shares in its portfolio which were of a total value of Rs 304.65 crore. Edelweiss Mutual Fund held 24.76 lakh shares of IndusInd Bank worth Rs 245 crore, followed by DSP Mutual Fund which had 16.79 lakh shares worth Rs 166.29 crore.
On the other end of the spectrum, a significant number of AMCs maintained relatively smaller exposures to IndusInd Bank. Around 19 AMCs had investments below Rs 100 crore, suggesting a more cautious approach or a strategic allocation of funds across a broader range of assets. Among these, JM Mutual Fund and HSBC Mutual Fund held investments of Rs 86.63 crore and Rs 78.44 crore, respectively. PPFAS Mutual Fund held around 4.40 lakh shares in its portfolio worth Rs 43.56 crore. Zerodha Mutual Fund and WhiteOak Capital Mutual Fund had shares worth Rs 2.76 crore and Rs 1.96 crore respectively in February. 360 ONE Mutual Fund and Taurus Mutual Fund had the lowest exposure of Rs 0.48 crore and Rs 0.29 crore respectively. This diversified landscape highlights the varying risk appetites and investment philosophies of different AMCs. In terms of scheme-wise exposure, SBI Nifty 50 ETF held the highest position, with an investment of Rs 1,165 crore, followed by HDFC Mid-Cap Opportunities Fund, which held an exposure of Rs 913 crore in February. This indicates that a significant portion of the investment in IndusInd Bank was channeled through index-tracking funds and ETFs. HDFC Large Cap Fund had an exposure of Rs 611 crore in February and had 61.78 lakh shares in the portfolio. Two schemes from Nippon India Mutual Fund - Nippon India Large Cap Fund and Nippon India ETF Nifty Bank BeES - had an exposure of Rs 336 crore and Rs 329 crore respectively in February. HDFC Flexi Cap Fund had around 25 lakh shares in its portfolio which were worth Rs 247 crore. Bandhan Flexi Cap Fund and Bandhan Small Cap Fund had an exposure of Rs 136 crore and Rs 135 crore respectively.
The prevalence of index funds and ETFs in holding IndusInd Bank shares is a reflection of the bank's inclusion in various market indices. According to mutual funds, since some of these stocks are part of indices, index schemes, and ETFs will have exposure to them. Consequently, these schemes are obligated to maintain a certain level of exposure to the bank's stock to accurately track the performance of the underlying index. Quant Mid Cap Fund had 9.50 lakh shares worth Rs 94.06 crore. The largest small cap fund based on assets managed, Nippon India Small Cap Fund, had 3.52 lakh shares worth Rs 34.89 crore. Parag Parikh Flexi Cap Fund, the largest flexi cap fund based on assets managed, had shares worth Rs 20 crore. SBI Nifty Bank Index Fund had an exposure of Rs 4.65 crore in the mentioned period. Axis NIFTY 50 ETF and Tata Nifty 50 ETF had an exposure of Rs 4.22 crore and Rs 4.17 crore respectively. Kotak MSCI India ETF and Bandhan BSE Sensex ETF had the lowest exposure of Rs 0.02 crore and Rs 0.01 crore respectively in February. This highlights the interconnectedness of the stock market and the potential impact of individual company performance on the broader market. Note, mutual funds report their portfolios for the previous month, the latest data available is for February 2025. The data presented reflects the investment landscape as of February 28, 2025, providing a snapshot of mutual fund exposure to IndusInd Bank prior to the recent market turbulence. As the situation evolves, it is crucial for investors to closely monitor the performance of their holdings and consult with financial advisors to make informed investment decisions.
Source: Which mutual funds hold highest exposure in IndusInd Bank?