(Bloomberg) -- Even with a prime opportunity to buy shares of HDFC Bank Ltd. foreign investors aren’t biting, and that may signal that sentiment on Indian equities has turned sour, according to Arihant Capital Ltd.
New rules for monitoring foreign holdings in Indian stocks opened a temporary window for additional overseas investment of about 92 billion rupees ($1.4 billion) in HDFC Bank on Monday. Shares of the bank listed in a special section for trading by foreign investors have fallen over the past two sessions, erasing their premium to the ordinary shares.
That hints at a loss of appetite not only for HDFC Bank, but for Indian stocks in general, said Anita Gandhi, a director at Arihant.
“HDFC Bank is a good stock but foreigners feel elevated prices may not sustain” and will likely wait to buy the shares at lower levels, she said. “We expect more downside in Indian markets before value can emerge,” said Gandhi, who sees market structure changes and a likely interest rate hike as near-term risks.
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