HDFC Bank shares down 8% from one-year high; should you enter at current levels?

HDFC Bank shares on Friday fell sharply after the private lender posted a quarter-on-quarter (Q0Q) decline in loans disbursed in the first quarter of the ongoing financial year (2024-25). The stock slipped 4.55 per cent to settle at Rs 1,648.10. At this price, it has fallen 8.03 per cent from its 52-week high of Rs 1,791.90, a level seen a couple of sessions earlier on July 3.

In the April-June quarter (Q1 FY25), gross advances dipped 0.8 per cent sequentially to 24.87 lakh crore. The drop in loan growth was due to a 5 per cent QoQ decline in corporate loans.

The bank's deposits stood at Rs 23.79 lakh crore in the June quarter, nearly flat from the previous quarter. Low-cost current and savings account deposits fell 5 per cent, sequentially, to Rs 8.64 lakh crore in the quarter.

Loan-to-deposit ratio (LDR), a metric to assess whether a lender has enough deposits to fund loan growth, was flat at 105 per cent compared with the prior quarter. These are provisional figures and the bank is scheduled to announce its financial results on July 20.

Looking at the lender's business update, we've maintained a stance that numbers are only going to improve gradually, Mayuresh Joshi, Head-Equity Research at William O'Neil India, told Business Today TV.

"The stock has moved significantly in the last few months. So, investors can look at it at lower levels. The stock will go through a phase of consolidation till numbers show improvement. And, the figures will start showing some element of respite by the second half of this financial year," Joshi stated.

On technical setup, a few analysts said support on the counter could be seen at Rs 1,590 and resistance may be found at Rs 1,700. With that being said, one of them suggested booking profit in the current Rs 1,630-1,660 zone.

"The stock has near-term support at Rs 1,590 level. It is expected to recover once a stability is confirmed near the Rs 1,590 zone and thereafter regain strength to carry on with the upward move. A decisive breach below Rs 1,530 would weaken the overall trend," said Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher.

"HDFC Bank's stock has encountered strong resistance around Rs 1,700 level. We advise traders to avoid initiating fresh positions at current market price," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers.

Those holding can book profits in the current Rs 1,630-1,660 range, Patel added.