Jefferies drops HDFC Bank: Why shares are tumbling

New Delhi: Global investment firm Jefferies has exited its holdings in HDFC Bank, leading to a 3 per cent decline in the bank’s shares, and has trimmed its India exposure across key portfolios following the resignation of the lender’s part-time chairman Atanu Chakraborty.

In its latest “Greed & Fear” report, Jefferies strategist Chris Woods confirmed that HDFC Bank has been removed from the firm’s Asia ex-Japan long-only equity portfolio, global long-only equity portfolio, and international long-only equity portfolio (ex-USA). While Jefferies did not provide a specific reason for the exit, the brokerage has added HSBC with a 4 per cent weighting in these portfolios, replacing HDFC Bank. The adjustment has also marginally reduced India’s overall weight in the portfolios.

The investment firm also revised its Asia Pacific ex-Japan relative-return portfolio, reducing exposure to India and Australia by two percentage points each, while increasing Taiwan’s weight by four percentage points. India now represents 13 per cent of Jefferies’ Asia Pacific ex-Japan allocation, slightly above the MSCI benchmark.

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These developments follow HDFC Bank’s disclosure on March 18 that part-time chairman Atanu Chakraborty had resigned, citing differences with the bank over “values and ethics.” Keki Mistry has been appointed as interim part-time chairman, while the bank engaged law firms to review Chakraborty’s exit. In his resignation letter, Chakraborty noted certain practices within the bank were “not in congruence” with his personal values, without elaborating further.

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Analysts have flagged potential market sentiment concerns. Anuj Singla of JPMorgan noted that while no misconduct has been alleged, the perception could impact investor confidence and elevate the governance risk premium on HDFC Bank stock. Reports suggest the Reserve Bank of India (RBI) may also be examining the circumstances of the resignation.

Shares of HDFC Bank fell as much as 3 per cent to Rs 758 on the BSE by 12:30 pm, marking a decline of approximately 14 per cent over the past month.

IANS