HDFC Bank shares hover near 52-week low; is it correct time to accumulate?

Shares of HDFC Bank Ltd have fallen nearly 10 per cent in 2023 so far, underperforming a 4 per cent rise in benchmark BSE Sensex. The stock on Friday was last seen trading 0.58 per cent higher at Rs 1,472. At this price, the scrip traded just 1.61 per cent higher than the one-year low price of Rs 1,448.75, a level seen on 28 October last year.

The private lender's second-quarter (Q2 FY24) standalone net profit came at Rs 15,976 crore as against Rs 10,606 crore in the year-ago period. The results marked the first quarterly earnings report following the merger with parent Housing Development Finance Corp (HDFC) on July 1 this year.

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As on September 30, 2023, gross non-performing assets (GNPAs) were at 1.34 per cent of gross advances from 1.41 per cent on a proforma merged basis in the June quarter (Q1 FY24) and 1.23 per cent in Q2 FY23. Net NPAs were at 0.35 per cent of net advances as on September 30, 2023.

Technical analysts largely said that the counter looked 'weak'. Support on the counter could be seen at Rs 1,450, followed by Rs 1,430 and Rs 1,380 levels. Although, long-term investors can accumulate it at current levels, one of them suggested.

Osho Krishan, Senior Research Analyst - Technical & Derivatives at Angel One, said, "HDFC Bank has failed to recoup from its strong support of the Rs 1,520-1,500-odd zone and slipped below the previous breakout zone. The counter looks weak, with Rs 1,450-1,430 as an immediate pitstop. On the higher end, the aforementioned zone is likely to be seen as resistance now and a deceive breakthrough could only re-strengthen the counter in the coming period."

Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher, said, "The stock has turned weak breaching below the Rs 1,500 zone currently entering into a bearish territory with next major support visible near Rs 1,380 zone. The indicators have shown weakness which can lead to further slide and for the overall bias to improve from current levels it has to move past the Rs 1,540-1,560 zone to establish conviction and anticipate for further rise."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "As we advance, the Rs 1,450-1,430-odd zone is credible support and resistance is seen near Rs 1,500. Long-term investors can accumulate in the zone of Rs 1,450–1,475."

DRS Finvest founder Ravi Singh said, "The stock may continue further selloff and touch the levels of Rs 1,440 in coming trading sessions."

The counter was trading lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 32.87. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 21.24 against a price-to-book (P/B) value of 2.74.

The scrip has an analyst target price of Rs 1,951, Trendlyne data showed, suggesting a potential upside of 33 per cent in a year. It has a one-year beta of 1.2, indicating high volatility on the counter.

(Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.)

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