HDFC Bank loses ₹1T market value after chairman's shocking exit
What's the story
HDFC Bank's stock price took a major hit today, falling 8% to a 52-week low of ₹772 on the BSE. The decline came after the bank announced the resignation of its part-time chairman, Atanu Chakraborty. In his resignation letter, Chakraborty cited "certain happenings and practices within the bank" that were not in line with his personal ethics. The news led to a significant drop in investor sentiment, with HDFC Bank's American Depository Receipts (ADRs) plummeting as much as 7%.
Market impact
HDFC Bank loses ₹1 lakh crore in investor wealth
The sharp fall in HDFC Bank's share price has taken its market capitalization down to ₹11.88 lakh crore, a far cry from the last close of ₹12.96 lakh crore. This translates to a loss of over ₹1 lakh crore in investor wealth. The bank's stock has already fallen over 9% this month, on track for its worst monthly performance in six years, according to Trendlyne data.
Investor impact
FIIs suffer biggest loss
The fall in HDFC Bank's shares has affected all types of investors, including mutual funds, foreign institutional investors (FIIs), and retail investors. FIIs, which held a massive 47.70% stake at the end of the December quarter, suffered the biggest loss with ₹45,072 crore wiped off their overall wealth. Other notable shareholders such as Government of Singapore and Vanguard also incurred losses due to this downturn.
Additional losses
LIC and retail investors also take a hit
The share price crash of HDFC Bank also impacted Life Insurance Corporation of India (LIC), one of its largest shareholders with a 4.77% stake as of the December quarter. The bank's stock decline wiped off ₹4,510 crore from LIC's portfolio wealth today. Retail investors holding a 9.41% stake in the private lender also took a hit, losing ₹8,900 crore due to the fall in HDFC Bank's shares.
Board response
RBI assures HDFC Bank remains well-capitalized
In light of the sudden resignation of its part-time chairman, HDFC Bank's board held a conference call today to address the issue. Interim chair Keki Mistry said there had been no discussion about governance on the board. The Reserve Bank of India (RBI) also noted that HDFC Bank remains well-capitalized and its financial position is satisfactory with adequate liquidity.