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In a major setback for investors, IndusInd Bank’s stock plunged over 20% on 11th March 2025, wiping off thousands of crores in market value. The sharp fall came after reports surfaced that the bank could face a ₹2,000-crore net worth hit due to discrepancies in its derivative exposures.
This sudden crash has also severely impacted mutual funds that had large holdings in IndusInd Bank shares. The total loss for mutual funds is estimated to be around ₹6,000 crore, making it one of the biggest single-stock blows to MFs in recent months.
Source: Economic Times/Moneycontrol
What Caused the Crash?
The steep fall in IndusInd Bank’s stock price was triggered by news that the bank could take a significant hit to its net worth because of derivative contracts gone wrong. Reports indicate that the bank is facing discrepancies related to its exposure in certain derivative trades, which has raised concerns over its financial stability.
Following this revelation, investors rushed to sell off their shares, sending the stock into a free fall.
Mutual Fund Exposure to IndusInd Bank
ICICI Prudential Mutual Fund holds the largest stake in IndusInd Bank, valued at ₹3,779 crore. HDFC Mutual Fund comes next with holdings worth ₹3,564 crore. SBI Mutual Fund follows, with investments totaling ₹3,048 crore. After IndusInd Bank’s 20% stock plunge, the value of mutual fund holdings has dropped to approximately ₹14,600 crore. This marks a sharp decline of nearly ₹6,000 crore in mutual fund exposure value.
Know More: SEBI Registered investment advisory | Stock investment advisory
| Mutual Funds Worst Hit by IndusInd Bank Stock Crash | ||
| Mutual Fund | Value as of February 2025 (in crore) | Current Value (in crore) |
| ICICI Prudential | 3778.55 | 2671.54 |
| HDFC | 3563.79 | 2519.65 |
| SBI | 3047.73 | 2155.39 |
| UTI | 2447.17 | 1730.41 |
| Nippon India | 2121.86 | 1500.24 |
| Bandhan | 926.34 | 654.92 |
| Franklin Templeton | 741.27 | 524.08 |
| Aditya Birla Sunlife | 619.17 | 437.76 |
| Kotak Mahindra | 522.65 | 369.51 |
| Tata | 517.29 | 367.72 |
Source: Moneycontrol
As per Ace Equities, 35 mutual fund houses collectively held over 20.88 crore shares of IndusInd Bank. The total value of these holdings was around ₹20,670 crore before the stock correction. UTI Mutual Fund, Nippon India Mutual Fund, Bandhan Mutual Fund, and Franklin Templeton Mutual Fund also have significant stakes. Their investments range between ₹740 crore to ₹2,447 crore.
Source: Moneycontrol
Impact on Investors
The immediate effect is a sharp drop in the NAVs (Net Asset Values) of the affected mutual funds. Long-term investors should watch how fund managers react and adjust their portfolios.
Since balanced advantage funds often change their investments based on market conditions, some may rebalance to reduce losses. But for now, the fall in IndusInd Bank’s stock has directly lowered the value of these mutual fund schemes, affecting lakhs of investors holding units in them.
Conclusion
The sudden fall of IndusInd Bank and the subsequent ₹6,000-crore hit to mutual funds highlight the risks of concentrated holdings in a single stock. While mutual funds aim to diversify risks, large exposures to troubled companies can still cause significant setbacks, as seen in this case.
For now, mutual fund investors impacted by this event may need to stay updated on developments around IndusInd Bank and watch how fund managers respond in the coming days.
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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQ
What caused the significant drop in IndusInd Bank’s stock value?
Discrepancies found within the bank’s derivative portfolio, leading to projected net worth reductions, triggered a large investor sell-off. This, combined with prior concerns, caused the steep stock decline.
Which mutual funds were most affected by IndusInd Bank’s stock plunge?
Mutual funds with substantial IndusInd Bank holdings such as ICICI Prudential, HDFC, including those managed by UTI and Bandhan, experienced the largest losses. The degree of impact was directly tied to holding percentages.
How did the IndusInd Bank crash result in a ₹6,000 crore loss for mutual funds?
Mutual funds held a large volume of IndusInd Bank shares. When the stock price tanked, the overall value of those holdings decreased dramatically, leading to the substantial financial loss.
What are derivative portfolio discrepancies?
Derivative portfolio discrepancies mean that the bank had errors in how they were accounting for its derivative financial instruments. This led to a large re-evaluation of the bank’s financial standing.
What does this IndusInd bank issue mean for Mutual fund investors?
It shows the risk of equity investing. Even well performing companies can have large drops in value. Investors should remember to diversify their holdings.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
