A recent report has revealed that around 1.6 crore shares of IndusInd Bank were sold by mutual funds in February, reducing the total number of shares held to approximately 20.7 crore from 22.3 crore in January.
During the period from April 2024 to January 2025, IndusInd Bank experienced inflows of Rs 10,200 crore in mutual funds. Unfortunately, in February 2025, there was an outflow of approximately Rs 1,600 crore.
The recent Mutual Fund Insight report from Nuvama Alternative & Quantitative Research highlighted that IndusInd Bank was one of the top reductions in the mutual fund industry. Quant Mutual Fund added three new stocks to their portfolio, including IndusInd Bank, purchasing 30.77 lakh shares worth Rs 300 crore in February.
Kotak Mutual Fund sold off shares worth Rs 509 crore during the same period. Bandhan Mutual Fund, on the other hand, held 93.47 lakh shares of IndusInd Bank worth Rs 900 crore, making it one of the top 10 holdings in their portfolio. PPFAS Mutual Fund also sold shares worth Rs 29 crore in February.
Additionally, Tata Mutual Fund sold shares worth Rs 126 crore in the specified timeframe. According to data from ACE MF, mutual funds collectively held approximately 20.08 crore shares of IndusInd Bank in their portfolios, with a total market value of Rs 19,884 crore as of February 28, 2025.
Following a significant drop in the stock price of IndusInd Bank by over 30% on Tuesday and last Friday, mutual fund schemes holding investments in the bank's shares experienced a sharp decline in the value of their holdings.
As of February, a total of 35 mutual funds and approximately 360 schemes collectively owned over 20.88 crore shares of IndusInd Bank. The value of these holdings decreased from Rs 20,670 crore to about RS 13,700 crore on Tuesday, resulting in a loss of around Rs 6,970 crore. Both actively managed funds and passive funds were impacted by the decline in IndusInd Bank's stock price, as the bank was part of many indices.
Among these, five AMCs had exposure exceeding Rs 1,000 crore. ICICI Prudential Mutual Fund held the highest exposure at approximately Rs 3,778 crore with around 3.81 crore shares in its portfolio. SBI Mutual Fund held shares worth Rs 3,047 crore with 3.07 crore shares in its portfolio, while HDFC Mutual Fund and UTI Mutual Fund held shares worth Rs 2,773 crore and Rs 2,447 crore, respectively.
As of February 28, 2025, Nippon India Mutual Fund held shares valued at Rs 2,121 crore, with a total of 2.14 crore shares in its portfolio. Kotak Mutual Fund and Tata Mutual Fund held shares amounting to Rs 522 crore and Rs 517 crore, respectively. Quant Mutual Fund held approximately 30.77 lakh shares in its portfolio, valued at Rs 304.65 crore. Edelweiss Mutual Fund held 24.76 lakh shares of IndusInd Bank, with a total worth of Rs 245 crore, while DSP Mutual Fund held 16.79 lakh shares worth Rs 166.29 crore.
MFs and IndusInd shares
Mutual funds have consistently increased their ownership in IndusInd Bank each quarter. During the period from April 2024 to January 2025, mutual fund inflows totaling Rs 10,200 crore were received by IndusInd Bank.
As of the end of the December quarter, mutual funds held a 30.31% stake in the bank, up from 22.73% in the previous quarter. Their ownership was at 19.91% in the June quarter 2024, 17.82% in the March quarter 2024, and 15.63% in the December quarter 2023.
Why did IndusInd shares fall?
IndusInd Bank, the fifth largest private bank in India, recently disclosed a significant accounting discrepancy due to an internal review of forex derivative transactions. The investigation revealed an accounting mismatch amounting to Rs 1,577 crore (post-tax), equivalent to approximately 2.35% of the bank's net worth as of December 2024. Following this revelation, shares of IndusInd Bank experienced a sharp decline of 27% on Tuesday, reaching a new 52-week low. The stock closed at Rs 655.95 per share, marking its lowest level since November 2020.
The stock rebounded on Wednesday, closing 4.43% higher at Rs 685 on the NSE. Year-to-date, the stock has dropped nearly 30%. Brokerages have expressed concerns about governance, with Morgan Stanley highlighting downside risks, Macquarie questioning internal processes, and Kotak downgrading the stock to 'reduce' and cautioning that rebuilding credibility could take multiple quarters.