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EVALUATING THE IMPACT OF HDFC STOCK REDUCTION ON MARKET INDICES AND INVESTOR ATTITUDES DURING THE HDFC-HDFC BANK MERGER

  • Unique Paper ID: 166922
  • Volume: 11
  • Issue: 2
  • PageNo: 2343-2350
  • Abstract:
  • The merger of Housing Development Finance Corporation (HDFC) and HDFC Bank in July 2023 signifies a landmark event in the Indian banking and financial services sector. This article elucidates the merger's impact on market indices, investor attitudes, and the financial landscape. Exploring the instance using event study methodology we systematically examine the stock performance of HDFC and HDFC Bank. Furthermore, the research delves into the regulatory alignment, the rationale behind the merger, and the potential benefits for the merged entity. The methodology involves a thorough review of literature, emphasizing the need for the study to analyze the HDFC stock reduction during the merger and its repercussions on market indices and investor behavior. The objectives encompass evaluating the changes in HDFC stock weightage in Nifty 50 and Bank Nifty, assessing the influence on share prices of HDFC and HDFC Bank, and understanding broader market effects. The analysis section dissects the stock movements of HDFC Bank and HDFC during crucial events, utilizing t-tests &Wilcoxon Rank Sum Test to assess the significance of these changes. Additionally, a CAMEL analysis provides insights into the capital adequacy, asset quality, management quality, earning quality, and liquidity of both entities. Advantages accruing from the merger viz., the creation of a competitive housing loan portfolio, access to low-cost funds, a large balance sheet, cross-selling opportunities, and a reduction in unsecured loans were identified. Notably, the event also had an impact on foreign institutional investor interest. A vivid impact of weightage changes in Nifty 50 and Bank Nifty due to the merger is unveiled. The study highlights replacements in indices following HDFC shares ceasing to exist.
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Cite This Article

  • ISSN: 2349-6002
  • Volume: 11
  • Issue: 2
  • PageNo: 2343-2350

EVALUATING THE IMPACT OF HDFC STOCK REDUCTION ON MARKET INDICES AND INVESTOR ATTITUDES DURING THE HDFC-HDFC BANK MERGER

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