Analysts said the HDFC Bank shares were unlikely to see steep downside pressure because of the high investor-interest in the stock. HDFC Bank had a weightage of around two per cent in the MSCI Index, analysts said.

“Banking stocks are in favour among investors because of the expectation of an earlier-than-expected interest rate cut by the Reserve Bank of India (RBI). HDFC Bank being the leader among them will continue to see higher demand, although some pressure on the stock is not ruled out,” said Nirmal Rungta, director and head (private client group), CIMB Securities.

Foreign institutional investors (FII) interest in the stock has been limited since December 2013, when the stock reached its maximum permissible level of 49 per cent. A raise in the unit is still awaiting approval from the Foreign Investment Proposal Board (FIPB) and subsequently from the RBI, for an upward revision in the FII-holding limit. The bank has requested FIPB to raise the limit to 74 per cent.

However, FIPB has rejected the proposed FII-limit hike on the grounds that the bank’s promoter, HDFC, already has high foreign promoter presence. Despite, the FII-limit being reached, the stock has gained about 32 per cent.

Market participants said the stock could see limited downsides of about 5-10 per cent from these levels, with buying opportunity at every dip.

Already, in the separate FII-trading window, opened by exchanges for stocks where FII-limits have been hit, the HDFC Bank stock is trading at a six to seven per cent premium to the cash-market, analysts said. In the ADR market as well, the stock is quoting at a premium of 11-12 per cent to the regular cash market.

Along with HDFC Bank, Reliance Capital, Reliance Power and Jaiprakash Associates have been excluded from the index. While JP Associates ended the day up 0.5 per cent, Reliance Capital and Reliance Power were down three and two per cent, respectively. JP Associates and Reliance Capital have been added to the MSCI Global Small Cap Index.

Analysts believe the exclusion would add to the negative sentiments around these stocks but would not significantly impact their performance.

While four have been deleted from the index, Motherson Sumi Systems and Zee Entertainment have been added to MSCI India Index. Zee Entertainment zoomed on inclusion gaining about five per cent to close at Rs 372.85. Motherson Sumi Systems was up about 0.5 per cent to close at Rs 428.20.

In the MSCI Global Smallcap Index, 44 new Indian companies have been added whereas eight have been excluded.

Analysts remain split about the impact on the mid and small-cap stocks. Some in the market believe that the index inclusion would push these stocks higher which have already surged this year on the back of revival in retail investor-interest.

Others believe that these stocks would see limited gains as the MSCI Global Small Cap Index does not have as large a following.

“There are not many funds which follow the global small cap index. So, these stocks might not see too sharp a rise. Besides, there are too many stocks in this index for there to be a big impact on any one scrip,” said Rikesh Parikh, vice president (equities), Motilal Oswal Financial Services.

The changes made to the indices will be effective as of the close of November 25.