The stock of HDFC Bank on Friday, which registered a new peak in intra-day deals, could not sustain the gains, as holdings by foreign investors in the lender topped the 74 per cent limit within hours of the RBI removing the buying restriction on them.

HDFC Bank shares hit an all-time high of ₹1,454 in early trade, a gain of 9.5 per cent from the previous day’s close.

On Thursday, after market hours, the RBI had removed restrictions on the purchase of shares of HDFC Bank by foreign portfolio investors, as the aggregate foreign shareholding in the lender fell below the prescribed limit.

According to analysts tracking the banking space, the RBI could have lifted the restriction due to the conversion of employee stock option schemes, which has led to foreign shareholding falling below 72 per cent.

Analysts estimate that about 35 lakh shares were added every month to equity in the last few months due to ESOP conversion.

The stock opened positively on Friday; it traded at a premium of about 10-12 per cent in the FII window. “The opening gain was mainly due to the premium capturing,” said a market observer based at Chennai. However, the stock pared most of the gains to close at ₹1,377.05 on the NSE, as the RBI once again barred FPIs from buying shares of the bank.

Capitalising on the opportunity In the futures & options (F&O) segment, traders closed 74.90 lakh shares in open interest positions. Using the arbitrage opportunity, between the futures and underlying prices, foreign investors made smart profits, said analysts. Some even shifted positions from futures to the underlying stock, they added.

February futures closed at 1,370.6, a discount to the underlying price of ₹1,377.05. In the last few days, it had been trading at a premium of about ₹3.

According to the observer, a huge quantity of shares had changed hands on the bourses in the opening minutes.

This could have been due to heavy buying by FPIs that closed the headroom for others, forcing RBI to reimpose the trading ban.

A little over 10 crore shares of HDFC Bank were traded on the NSE, of which 6.67 crore shares were delivery-based. On the BSE, 55.25 lakh shares were traded, which is much higher than the two-week average volume of 65,000 shares.

Foreign investor holding in HDFC Bank tends to be high because the bank’s promoter Housing Development Finance Corporation is considered a foreign entity, as foreign ownership in the company is more than the permissible limit of 74 per cent.