The Economic Times reported that HDFC Bank shares hit a lifetime high of Rs 1,757.50 before closing more than 1% higher at Rs 1,721.00. The merger of HDFC and HDFC Bank was announced in early April last year, and shares of the two lenders have risen 14-17% since then, including Monday’s gains.
Are you wondering what this means to your mutual funds? Many mutual fund schemes had exposure to both these entities. Many schemes might breach the 10% limit prescribed by Sebi. Mutual fund schemes cannot hold more than 10% of its corpus in a stock.
ETMutualFunds looked at combined exposure of both the entities in all the actively managed mutual fund schemes. Sectoral and thematic funds are exempted from this limit. Around 40 equity schemes have more than 10% combined exposure in HDFC Bank and HDFC Ltd.
These mutual fund schemes will have to sell their holdings to bring the exposure to the prescribed level of 10%. However, mutual fund advisors say Sebi might allow some time for the fund houses to bring down the holdings so that it will happen in a smooth manner. A sudden selling might result in shares prices coming down in the stock market.
