The merger of Housing Development Finance Corporation (HDFC) – the housing finance behemoth and holding company of many HDFC group companies in banking, insurance and other financial services, with HDFC Bank may make many mutual fund managers revisit their portfolios.
If the two companies’ current weights in the Nifty 50 Index are anything to go by, the combined entity’s weight in the Nifty 50 Index may be over 10 percent. The merger should get finalised in the next 15-18 months. As diversified mutual fund schemes are not permitted to invest more than 10 percent in individual stocks, this can put active fund managers in a situation where they find it difficult to beat the market benchmark Nifty 50.
