Shares of HDFC Bank on Tuesday continued their downward trend for the ninth straight session. Earlier this month, mortgage lender Housing Development Finance Corporation (HDFC) announced that it will merge with the private bank.
In response, HDFC and HDFC Bank referred to as HDFC twins, had witnessed a sharp rally on April 4. However, both the stocks have been declining after that.
HDFC Bank fell as much as 3.73 per cent to settle at Rs 1,343.30 today on the BSE index. On the NSE platform, the stock plunged 4.33 per cent to close at Rs 1,335.
Manoj Dalmia, Founder and Director - Proficient Equities Ltd, said: "Shares of HDFC Bank, which fell for the ninth consecutive trading session today, are unlikely to see any short-term recovery after a miss on quarterly earnings. The stock has corrected by about 20 per cent in the last 9-10 days despite the merger news. Price targets have been slashed for this stock."
Mr Dalmia added, "Investors are advised to buy on dips. The stock is under temporary selling pressure due to the result declaration, it might soon recover as we expect this stock to regain its momentum and reach Rs 1,650 levels again in the coming months."
HDFC Bank posted a 23 per cent jump in standalone net profit to Rs 10,055.20 crore for the March quarter. HDFC currently owns 21 per cent of HDFC Bank.
Ravi Singhal, Vice Chairman, GCL Securities Ltd, said, "As we can see from management's confirmation, the merger will benefit from 2024 to 2025, a long period, which is why profit-booking is coming in stock while the results are weak. As a result, it may show a greater negative impact of 5 per cent."
Currently, HDFC has total assets of Rs 6.23 lakh crore, while HDFC Bank has assets worth Rs 19.38 lakh crore. HDFC Bank has a large customer base of 6.8 crore.
Ravi Singh, Vice-President and Head of Research, ShareIndia, said, "The overall sentiment in the market is negative, especially the banking sector which is in correction mode. HDFC Bank may also further correct up to Rs 1,300 - Rs 1,280 levels.
Mr Singh further said, "Long-term investors need not to worry about the current volatility. In the next quarter also, the banking sector may witness some more weaknesses in the earnings growth. The soaring inflation is also pushing RBI to take steps for fiscal tightening, which will further affect the sector."
Meanwhile, HDFC cracked as much as 5.50 per cent to close at Rs 2,138.65 today on the BSE. On NSE, the stock plunged 6.26 per cent to end at Rs 2,121.75.