HDFC bows out of exchanges with record deliveries

In addition to fresh buying, those holding derivatives positions on NSE would have also opted for delivery as all derivatives contracts remaining open by the end of trade on 12 July would result in compulsory delivery, given the attractive swap ratio, said analysts. This enabled the HDFC share to top the list of 25 most traded shares on Wednesday on the NSE.

“I think fresh buying coupled with derivatives traders taking delivery resulted in record high volumes both by number and value,” said Shrikant Chouhan, head of research (retail) at Kotak Securities.

The buying of HDFC shares accounted for 13% of the overall volume of ₹91,397 crore traded on the NSE. On BSE, too, a good deal of deliveries happened, although way lower than those on NSE.

A total of 310,000 shares changed hands against 438,000 being traded.

Since the cash market segment delivery has been shifted to T+1 cycle from T+2, all those buying shares on Wednesday on both the exchanges would be eligible to receive the merged entity shares in the ratio of 25:42—25 shares of HDFC will fetch 42 shares of the merged HDFC Bank.

In the F&O segment, the expiry of stock futures and options occurs on the last Thursday of a month. But, with HDFC ceasing to exist as a stock from 13 July, all such positions were to be closed out before 3:30 pm on Wednesday. Those keeping their outstanding buy-sell positions open would be obliged to take and give delivery of the shares.

Normally, traders roll over their derivatives positions before their contracts expire on the last Thursday of the month, but the favourable swap ratio in the HDFC-HDFC Bank merger might have “induced” some of them to keep their positions open instead of closing them out, said Rajesh Palviya, derivatives head, Axis Securities.

“That’s one of the reasons for deliveries being so high in the cash segment,” he added.

In exchange parlance, equity cash and F&O, currency and commodity derivatives are different segments offered by a stock exchange.

Kruti Shah, a quant analyst at Equirus, said that sellers of HDFC would be ones who might have been “overweight” in the merged entity (HDFC Bank) and thus sold some of their holdings in the “merging company”. HDFC is being merged into and with HDFC Bank.

“It’s sad that something you nurtured won’t be there,” an emotional Keki Mistry, who was CEO and vice chairman of HDFC, said when asked how he felt about the stock ceasing to exist. “The recompense is that there won’t be a new name. The name HDFC stays.”

On the outlook for the merged entity, HDFC Bank, Mistry said, “The future is very bright with growth opportunities being aplenty, with a much wider platform and low penetration of mortgages in the bank.”