Right before accounting crisis, MFs sold IndusInd Bank shares worth ₹1,600 crore in February

India’s mutual funds sold shares worth ₹1,600 crore of Mumbai-based private lender IndusInd Bank Ltd. in the month of February, according to a report by Nuvama Alternative & Quantitative Research. The selling happened just a month prior to an accounting issue coming to light, that led to shares of the bank seeing their biggest single-day drop on record.

IndusInd Bank features on top of the key reductions in holdings by Mutual Funds by February, with other names like InterGlobe Aviation (₹1,300 crore) and Bajaj Finance (₹1,300 crore) also part of the list. Bajaj Finance is the top performer on the Nifty 50 index so far in 2025.

Prominent among the funds who sold stake in IndusInd Bank in February include the likes of Kotak Mutual Fund, who sold shares worth ₹510 crore, Motilal Oswal MF, who sold shares worth ₹126 crore and PPFAS Mutual Fund.

While these funds were sellers in IndusInd Bank last month, Quant Mutual Fund was a buyer of the stock, accumulating shares worth ₹305 crore in February, according to the Nuvama Alternative report.

IndusInd Bank’s shares fell 27% on Tuesday, March 11, after the lender reported some deficiencies in its derivatives accounting transactions prior to April 1, 2025. Internal estimates anticipate a hit of ₹1,577 crore due to this issue.

The fall led to a market capitalisation erosion of close to ₹20,000 crore and the stock also entered the F&O ban. The bank’s MD & CEO Sumant Kathpalia assured investors that IndusInd Bank will turn in a profit during the March quarter despite this hit and that the issue is a one-off in an exclusive interaction with CNBC-TV18 on Tuesday evening.

Shares of IndusInd Bank saw a marginal recovery on Wednesday, when the stock saw some short-covering as it was in the F&O ban, which means no new positions can be created in the stock.

Back in February, IndusInd Bank had also seen a weightage increase in the MSCI Global Standard Index, where analysts were projecting the lender to see inflows worth up to $260 million when the rebalancing took place on February 28.

IndusInd Bank shares ended 4.4% higher on Wednesday at ₹684.7. The stock is now under Stage 1 of the Short-term ASM framework. The margin rate applicable under this stage is 1.5 times the existing margin, or 40% and is capped at 100%.