MUMBAI: International brokerage Jefferies has exited its holdings in HDFC Bank, the second largest in the stock indices and the largest in Bank Nifty, and has also trimmed its India weighting.
Chris Woods, the top strategist at Jefferies, has cut exposure to the HDFC Bank stock from three key portfolios: Asia ex-Japan long-only equity portfolio, the global long-only equity portfolio, and the international long-only equity portfolio, ex-US. However, Woods did not explain his reasons for doing so in his latest weekly ‘Greed & Fear’ report. But the move comes within a week of the bank’s part-time chairman Atanu Chakraborty’s resignation last week.
It is not known how many shares the brokerage had owned in the bank and when did it exactly sold them.
For all the portfolios, the brokerage decided to include an investment in HSBC with a 4% weighting by removing the investment in HDFC Bank. This also led to a reduction in weighting for the brokerage's India holdings.
Following the abrupt resignation the shares of the second most valuable company in the country had tanked close to 7.5% in two sessions. Today the HDFC counter was trading 2.5% down as the market was also bleeding by almost 2% at 1400 hrs.
The brokerage also noted that some changes will also be made in the Asia Pacific ex-Japan relative-return portfolio. "The weighting of Australia and India will be reduced by 2 percentage points each, while the weighting of Taiwan will be increased by 4 percentage points,” said the report.
The India weighting in Jefferies Asia Pacific ex-Japan asset allocation is at 13% now, 50 bps higher compared to the MSCI Asia Pacific ex-Japan weighting.
HDFC Bank said late on March 18 Chakraborty resigned citing differences with the lender over "values and ethics", and appointed insider Keki Mistry as interim part-time chairman.
"Certain happenings and practices within the bank, which I have observed over the past two years, are not in congruence with my personal values and ethics," Chakraborty said in his resignation letter, without elaborating. Even after being requested repeatedly by the board, he did not elaborate on the issues cited in the letter.
Following this both Sebi and RBI are probing his resignation as well as the details of the recent board meetings of the bank. Sebi has in fact talked tough on his unsubstantiated insinuations and lose talks and asked independent directors to behave and talk more responsibly.
The bank has also roped in two law firms—one domestic and another from the US to probe Chakraborty’s resignation.