IndusInd Bank Stock: Mutual Funds React to 26% Decline
In recent news, shares of IndusInd Bank Ltd. plummeted by a significant 26% on Tuesday in response to fresh downgrades and revised price targets issued by covering analysts. This sudden drop followed the bank’s disclosure of yet another unfavorable development on Monday, March 10.
Mutual fund investments in IndusInd Bank have experienced a substantial decrease of over Rs 6,000 crore on March 11, in light of the recent stock correction. The bank attributed a 2.4% impact on its net worth to valuation changes in derivative transactions, causing concerns among investors and industry experts alike.
Mutual Fund Investments in IndusInd Bank
In February 2025, data from Ace Equities indicated that 35 mutual funds collectively held over 20.88 crore shares of IndusInd Bank, valued at Rs 20,670 crore. However, following the recent market correction, the total value of these holdings has fallen to Rs 14,600 crore, marking a substantial decline in mutual fund investments.
Among these mutual funds, ICICI Prudential MF holds the largest stake at Rs 3,779 crore, followed closely by HDFC MF at Rs 3,564 crore, and SBI MF at Rs 3,048 crore. Other significant holders include UTI, Nippon India, Bandhan, and Franklin Templeton MFs, with investments ranging from Rs 740 crore to Rs 2,447 crore.
As of February 28, 2025, Kotak Mutual Fund and Tata Mutual Fund held shares valued at Rs 522 crore and Rs 517 crore, respectively, while Quant Mutual Fund had approximately 30.77 lakh shares in its portfolio, totaling Rs 304.65 crore. Edelweiss Mutual Fund and DSP Mutual Fund also had significant stakes in IndusInd Bank, owning shares worth Rs 245 crore and Rs 166.29 crore, respectively.
Risk Factors and Banking Industry Concerns
IndusInd Bank’s recent disclosure of a 2.35% decrease in net worth due to irregularities in derivative transactions has reignited concerns regarding risk factors within the banking industry. The deviation from Reserve Bank of India (RBI) guidelines on derivatives, which took effect in April 2024, has raised red flags among investors and experts.
Devina Mehra, the Founder & CMD of First Global, has been vocal about the inherent risks associated with the banking sector. In a recent social media post, Mehra expressed her apprehensions as a nervous investor in banks and lenders, shedding light on the precarious nature of banking operations.
Mehra emphasized that banks face disproportionate risks compared to rewards, with negative surprises often outweighing positive outcomes in the long run. The unpredictable nature of banking, coupled with the potential for high leverage and hidden risks, makes it a challenging sector for investors to navigate.
Conclusion
The recent turbulence surrounding IndusInd Bank’s stock and mutual fund investments underscores the complex and volatile nature of the banking industry. As investors grapple with uncertainties and unforeseen risks, it is crucial to remain vigilant and informed about market developments. The ongoing challenges facing IndusInd Bank serve as a stark reminder of the ever-present dangers lurking beneath the surface of financial institutions.
