Pashupati Advani: Why HDFC Bank’s Rise is Powering Up Bank Nifty and Could Boost Your Money

Pashupati Advani, chairman of Global Foray, believes that the recent surge in HDFC Bank’s stock price might not be temporary. He attributes this rise to the bank’s improving stock ownership numbers and the upcoming MSCI index changes. Advani explains that HDFC Bank’s higher free float—currently 54.8% compared to MSCI’s 55.5%—is likely to attract more investors, which is boosting the stock. The significant position of HDFC Bank in the Bank Nifty index also helps lift the entire sector.

Although the bank is dealing with some issues related to its recent merger, Advani is optimistic about the long-term impact. He also notes that the listing of HDFC Bank’s ADRs in the US, which are not included in the free float calculations, could provide an additional boost if they are considered in the future.

The Power Sector’s Potential and Challenges

Advani sees potential in the power sector due to the government’s ongoing infrastructure spending, including investment in power infrastructure. With a notable demand-supply gap in electricity this year, the government is increasing thermal power capacity. This is benefiting companies that supply equipment for power generation and storage, such as BHEL, Siemens, and ABB.

He acknowledges that building new power infrastructure will take time, but anticipates steady growth for companies involved in the sector as the government continues to support both coal-based and renewable energy projects.

Insights on Mid-Tier Banks

Regarding mid-tier banks like Bandhan Bank, Federal Bank, and RBL Bank, Advani suggests that while these banks are performing well, he prefers focusing on top-tier banks like HDFC Bank. He believes the top-tier banks still offer potential for growth, which might make them more appealing than their mid-tier counterparts for investors seeking quality and stability.

In summary, Advani suggests investors could benefit from the ongoing developments in both the power and banking sectors, particularly by focusing on well-established companies that are showing signs of growth and stability.