After hitting a 52-week low of ₹682 on 11 September, HDFC Bank shares have rebounded, raising questions: Is it the right time to buy the stock, or is it just a technical rebound?
The banking stock is up over 4% so far in September, compared to a nearly 3% fall in the equity benchmark Sensex. While HDFC Bank shares look set to snap their two-month losing run, the Sensex is on course to extend its losses for the second consecutive month.
On 21 September, HDFC Bank stock rose by 1.49% to end at ₹740, staying as the top contributor to the gain in the Sensex, which ended 0.76% higher at 74,859.
On a prolonged downtrend
The fact that HDFC Bank stock has given negative returns over the last five years can make any investor cautious. The BSE data show that it has declined 4.5% in the last five years, 4.7% in the last three years, 15% in the last two years, 23.5% in the last year, and 25.3% year-to-date.
It hit a 52-week high of ₹1,020.35 on 23 October last year. At the current market price of ₹740, the stock is down 27.5% from its one-year peak.
Despite healthy asset quality and resilient profitability, the underperformance of this stock can be broadly attributed to concerns over the sluggish pace at which it is normalising its loan-to-deposit ratio (LDR) after its merger with HDFC, the near-term compression of net interest margin (NIM) and the latest development on the leadership reset.
Is it the right time to buy HDFC Bank shares?
Experts say yes. The shareholding pattern data of the stock shows it remains a favourite of domestic as well as foreign institutional investors.
By the end of the June quarter of the financial year 2026-27 (FY27), domestic institutions – which include mutual funds, insurance companies, provident and pension funds, sovereign wealth funds, etc. – cumulatively held 41.92 % stake in the company, while foreign portfolio investors (FPIs) held 41.83% stake in it.
Recently, in August, the Reserve Bank of India (RBI) granted approval to Life Insurance Corporation of India (LIC) to acquire an aggregate stake of up to 9.99% in the bank.
Experts say the stock is suitable for long-term investors.
“The stock was impacted by margin challenges, which weighed on earnings. There were also governance-related concerns, particularly around the appointment of the next CEO. These factors had an impact on earnings and the overall sentiment. With most of these negatives already priced in, and with greater clarity emerging on the possible course of action, we have a buy recommendation on the stock for the long term,” Ajit Mishra, SVP of Research at Religare Broking, told Mint.
Mishra, however, added that he does not expect an outright strong recovery or reversal. The recovery may be gradual, as he is looking at the ₹760–800 range as the medium-term target band.
“Once the stock manages to hold above and surpass these levels, and we see improvement in the numbers as well, we could see a more sustained recovery in the stock,” said Mishra.
The stock’s valuation is also fair at this juncture, as it trades at a price-to-book of nearly 2.5 times against a reported ROE of 13.6%, which, as per experts, is a meaningful discount to where the stock has historically traded.
Moreover, it trades at around 14 times earnings, below ICICI Bank at around 16 times and Kotak Mahindra Bank at around 20 times. Axis Bank trades at around 14 times.
“One should buy the stock now. With the stock trading near multi-quarter lows and core fundamentals intact, the risk-reward favours accumulation for investors with a 12-18 month horizon, as continued deposit mobilisation, CASA recovery, and NIM stabilisation should support a gradual re-rating,” said Vinit Bolinjkar, the head of research at Ventura.
Technical experts also appear positive about the stock.
HDFC Bank shares tech view
According to Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, HDFC Bank has formed a bullish divergence on the weekly RSI, indicating improving momentum and the possibility of a recovery in the coming months.
Adding further strength to the bullish bias, hammer candlesticks have emerged in the ₹680–700 zone, highlighting buying interest and the presence of support at lower levels.
“The combination of weekly RSI bullish divergence and the hammer formation strengthens the overall technical structure. Hence, we advise accumulating HDFC Bank on every dip for an upside target of ₹800–820 over the next 5–6 months,” said Patel.
“The ₹680 level will act as a crucial support and risk-management level, and a sustained break below ₹680 would invalidate the bullish view. Overall, the stock offers a favourable technical setup for gradual accumulation from a medium-term perspective,” Patel said.
Vipin Kumar, AVP-Research at Globe Capital Market, highlighted that the stock rebounded from the ₹660 – ₹680 spot support zone and breached the ₹730 – ₹735 resistance zone to the upside on 21 September. Going forward, Kumar believes the stock is expected to scale toward ₹760 – ₹770, a key confluence zone marked by horizontal resistance and the six-month EMA on the daily chart.
“A decisive close above ₹770 could trigger further upside toward the ₹790 – ₹808 gap resistance zone,” said Kumar.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
