Mutual Funds Lose More Than Rs.7,300 Crore as IndusInd Bank Stock Plunges
IndusInd Bank’s stock price dropped by over 27% on Tuesday following the finding of some “discrepancies” in some portfolios. The bank announced that this issue had a negative impact of 2.4% on the bank’s worth. This dramatic fall in the stock price had a huge impact on mutual funds that had large positions in the bank.
Mutual Funds’ Exposure to IndusInd Bank
As of February 28, mutual funds held a total of over 22.56 crore shares of IndusInd Bank, reports said. The aggregate value of these holdings was around Rs.22,339 crore as of the end of February. But after the recent stock crash, the value has dipped to around Rs.15,000 crore, a whopping fall of Rs.7,339 crore.
Shares of IndusInd Bank crashed over 27.40% to trade at Rs.653.85 per share on the BSE at 1453 hours on Tuesday.
Worst-Hit Mutual Funds
A number of mutual funds suffered significant losses as a result of the sharp decline in the stock. The most hit schemes among them are:
UTI Nifty 50 Exchange Traded Fund
- Shares held: 35.94 lakh
- Loss incurred: Rs.120 crore
UTI Value Fund—Regular Plan Growth
- Shares held: 19 lakh
- Loss incurred: Rs.63.46 crore
UTI Nifty Bank Exchange Traded Fund
- Shares held: 15.78 lakh
- Loss incurred: Rs.52.70 crore
Bandhan Flexi Cap Fund—Growth
• Shares held: 13.80 lakh
• Loss incurred: Rs. 46.09 crore
UTI Mid Cap Fund—Regular Plan Growth
- Shares held: 13.27 lakh
- Loss incurred: Rs. 44.32 crore
Highest Exposure Fund Houses
Among the different mutual fund houses, UTI Mutual Fund had the maximum exposure to IndusInd Bank, with around 1.27 crore shares held by it under 15 different mutual fund schemes, as per reports. Other asset management firms with high exposure are Bandhan Mutual Fund, Quant Mutual Fund, Motilal Oswal Mutual Fund, LIC Mutual Fund, Sundaram Mutual Fund, and Invesco India Mutual Fund.
Rising Mutual Fund Investment in IndusInd Bank
Even after the recent losses, mutual funds had been raising their holdings in IndusInd Bank quarter by quarter. Mutual funds together owned 30.31% of the bank’s shares as of December 2024, as against 22.73% in the last quarter. Their stake stood at 19.91% in the Jun-2024 quarter, 17.82% in the Mar-2024 quarter, and 15.63% as of Dec-2023.
IndusInd Bank Share Suffers Rigorous Sell-Off
The steep decline in IndusInd Bank’s stock was due to an internal valuation, which had an adverse post-tax effect of 2.35% on the bank’s net worth as of December 2024. The revelation followed a circular by the Reserve Bank of India (RBI) instructing banks to conduct a comprehensive review of their investment books.
The sharp drop in IndusInd Bank stock has bitten heavily into mutual funds that had high exposures in the bank. The abrupt erosion of over Rs.7,300 crore worth of mutual fund holdings shows the risk of overselling to the extent of holding individual stocks. Investors are alerted to monitor closely market activity and fund performance after such an incident.
