HDFC Bank shares declined by 3% during intraday trade on Tuesday, contributing to a drop in the benchmark S&P BSE Sensex and NSE Nifty50 indices. The fall followed MSCI’s announcement of a smaller-than-expected increase in the bank’s weight in its August rebalancing, with only a 25 basis point (bps) rise instead of the anticipated 50 bps.
This adjustment has led to a 5% decrease in HDFC Bank’s stock price this year. Despite the short-term drop, analysts advise long-term investors to hold onto the shares, noting the bank’s strong market position and positive future prospects.
Anwin Aby George, a research analyst at Geojit Financial Services, attributed the stock’s initial negative response to traders’ reactions, with a recovery expected as the market adjusts. However, some analysts caution that recent increases in fixed deposit rates and a challenging credit environment could impact the bank’s profit margins in the near term.
HDFC Bank reported a 35.33% year-on-year increase in its standalone net profit for Q1 FY25, reaching Rs 16,174.75 crore. Despite this strong performance, the bank may face headwinds due to a high credit-to-deposit ratio and industry-wide credit slowdowns.
