₹41,000 Cr Stake Sale: FIIs Sold HDFC Bank Shares in Q4; Which Bank Did They Invest in Next?

Synopsis: FIIs sold heavily in HDFC Bank, causing sharp outflows and a stock decline, while simultaneously accumulating shares in largest public-sector bank, which saw strong inflows and stable performance despite broader sector weakness. 

Foreign Institutional Investors (FIIs) showed a sharp divergence in their banking sector strategy during the quarter. While they reduced exposure significantly in private lender HDFC Bank Ltd, the stock witnessed heavy outflows and a notable decline in shareholding.

In contrast, FIIs increased their stake in a public sector lender, making it one of their preferred picks for the quarter. This shift highlights a rotation in investor preference within India’s banking space. 

Foreign institutional inflows into India are facing a mix of cyclical hesitation and structural headwinds. Goldman Sachs notes that even if most foreign selling is over, fresh buying is unlikely to return quickly, as historical patterns show capital flows do not rebound immediately, even when crude oil prices fall. 

At the same time, Indian equities remain relatively expensive as MSCI India trades at about a 70% price-to-earnings premium over MSCI Emerging Markets, above its 10-year average of 62%. This valuation gap is becoming more difficult to justify as global investors find stronger earnings momentum elsewhere, especially in AI-linked semiconductor markets. According to Jefferies, global capital is increasingly rotating toward Taiwan and Korea, where earnings upgrades have been sharp.

HDFC Bank Ltd 

HDFC Bank Ltd is one of India’s largest private-sector banks, known for its strong retail banking presence, digital banking services, and wide network of branches and ATMs across the country. It offers services like savings and current accounts, loans, credit cards, insurance, and wealth management. The bank is especially recognised for its efficient customer service and advanced mobile banking platforms.

HDFC Bank saw the highest FII selling, with a net outflow of Rs. 41,449 crore during the quarter. Foreign Institutional Investors reduced their holding by more than 47.94 crore shares, taking their total stake down to around 587.43 crore shares.

The intense selling pressure was reflected in the stock’s performance, which declined sharply by 26.20% over the period. Despite its large market capitalisation of over Rs. 12 lakh crore, the bank came under significant pressure as FIIs rebalanced their portfolios.

State Bank of India

State Bank of India is the largest public-sector bank in India and a government-owned financial institution with a vast domestic and international presence. It provides a full range of banking services including deposits, loans, investment products, and government-related banking operations. SBI is known for its trust, extensive reach even in rural areas, and its role as a key pillar in India’s financial system.

State Bank of India (SBI) emerged as a top pick for Foreign Institutional Investors during the quarter, recording a significant net inflow of Rs. 10,720 crore. Defying the broader selling trend in the banking sector, FIIs increased their stake by 9.78 crore shares, taking their total holding to approximately 104.43 crore shares by the end of March 2026. 

Despite the strong institutional buying, the stock remained largely flat with a marginal decline of 0.29% over the three-month period. With a market capitalisation holding steady at Rs. 10,16,383 crore, the bank demonstrated high resilience. 

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post ₹41,000 Cr Stake Sale: FIIs Sold HDFC Bank Shares in Q4; Which Bank Did They Invest in Next? appeared first on Trade Brains.