Mutual fund schemes holding investments in IndusInd Bank shares have seen a significant decline in value as the stock plummeted over 30 per cent in the last two trading days to ₹656 a share on Tuesday from ₹936 last Friday.
The sharp drop in IndusInd Bank’s stock price to a new 52-week low of ₹649 on Tuesday was due to the disclosure of a 2.4 per cent impact on its net worth resulting from changes in the valuation of derivative transactions.
As of February, 35 mutual funds and around 360 schemes collectively held over 20.88 crore shares of IndusInd Bank, valued at ₹20,670 crore. However, this value decreased by ₹6,970 crore to about ₹13,700 crore on Tuesday. Both actively managed and passive funds were impacted as the bank was a part of many indices.
Five AMCs had exposure of over ₹1,000 crore in the bank, with ICICI Prudential MF having the highest exposure at about ₹3,778 crore. Other major holders included HDFC MF, SBI MF, UTI, Nippon India, Bandhan, and Franklin Templeton MFs, with investments ranging from ₹740 crore to ₹3,564 crore.
Kotak MF and Tata MF had shares worth ₹522 crore and ₹517 crore respectively. Quant MF held about 30.77 lakh shares valued at ₹305 crore in its portfolio.
In terms of risk exposures, between April 2024 and January 2025, IndusInd Bank received mutual fund inflows of ₹10,200 crore, but saw an outflow of about ₹1,600 crore in February 2025.
Nikunj Saraf, VP of Choice Wealth, emphasized the importance of fund managers conducting thorough due diligence on a bank’s risk exposures before allocating capital, especially given that many Indian banks have overseas operations and derivative exposures.
Despite the concerns, Ajay Garg, CEO of SMC Global Securities, noted that the bank’s profitability, reserves, and capital adequacy ratios were strong enough to absorb the discrepancies. The bank also appointed an external agency to review and validate the internal findings.
Various research houses like Kotak Institutional Equities, MOFSL, ICICI Securities, Nuvama, Nirmal Bang, and PL Capital suggested revised target prices for IndusInd Bank’s stock, ranging from ₹750 to ₹1,000.
In conclusion, the sharp erosion in the value of mutual fund holdings in IndusInd Bank highlights the need for fund managers to carefully assess risk exposures to protect investors’ interests.
