The sharp crash in HDFC Bank shares following the resignation of part-chairman Antanu Chakraborty, citing differences over “values and ethics”, has significantly eroded investor wealth as the overall market capitalisation of India’s largest private lender briefly slipped below the ₹12 lakh crore mark.
₹772″>HDFC Bank share price crashed 8% to a 52-week low of ₹772 on the BSE today, as against the last closing price of ₹842.95. The investor sentiment had weakened significantly overnight as HDFC Bank ADRs tumbled as much as 7% after the bank informed about the resignation in a late-night filing.
At the day’s low, HDFC Bank shares market capitalisation came in at ₹11.88 lakh crore as against the last close of 12.96 lakh crore. So far in March, the private lender’s stock has declined over 9%, putting it on track for the worst monthly fall in six years, according to Trendlyne data.
HDFC Bank crash wipes off investor wealth
The fall in HDFC Bank shares has dealt a blow to all categories of investors as it is a popular bet for mutual funds, foreign institutional investors (FIIs) and also retailers. Some marquee names holding HDFC Bank include Life Insurance Corporation of India (LIC), the Government of Singapore and the Vanguard index fund.
The biggest blow was dealt by FIIs, given the massive 47.70% stake held by them at the end of the December quarter. Today’s meltdown in HDFC Bank shares wiped off ₹45,072 crore from their overall wealth.
Government of Singapore faced a steep ₹2,150 crore loss for the 2.27% stake held in the lender, while Vanguard lost ₹1,176 crore as it owned 1.24% shares of HDFC Bank.
The Government Pension Fund Global, commonly known as the Oil Fund, is Norway’s sovereign wealth fund and the world’s largest. It held a 1.22% stake in HDFC Bank and suffered a notional loss of ₹1,151.27 crore today.
Back home, LIC is among the biggest shareholders of HDFC Bank. As of its December quarter holding of 4.77%, HDFC Bank’s share price crash wiped off ₹4,510 crore from its portfolio wealth today.
Overall, the total loss borne by mutual fund investors was ₹25,209 crore.
Lastly, the stock price decline in HDFC Bank dealt a ₹8,900 crore hit to retail investors for the 9.41% stake held by them in the private lender.
HDFC Bank board, RBI allay concerns
Following the sudden resignation of the part-time chairman, the HDFC Bank board tried to ease concerns about the same in a conference call held earlier today. Interim chair Keki Mistry, who has been appointed for three months in place of Chakraborty, said that there had been no discussion regarding governance within the board.
On the call, he added that he was not aware of the issues raised by Chakraborty in the resignation letter that the bank received on Wednesday and said there were “no power struggles within the bank”. “There could have been a relationship issue between Chakraborty and management. That may have manifested over a period of time,” Mistry said.
Additionally, the Reserve Bank of India (RBI) also took note of the recent developments at HDFC Bank and suggested that the lender remains well-capitalised and the financial position of the bank remains satisfactory with sufficient liquidity. “Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance.”
Following these developments, HDFC Bank shares rebounded from the day’s low and were trading 4.38% lower at ₹806 as of 11.45 am.
HDFC Bank share price outlook
Technical charts, however, signal that the overall trend remains negative as HDFC Bank stock has broken below all major short-term and long-term moving averages of 20, 50, 100, and 200 EMAs, confirming a sustained bearish trend structure, said Kunal Kamble, Sr. Technical Research Analyst at Bonanza.
He said that at this juncture, fresh positions should be avoided. “Price action shows that after rejection from a key resistance zone, the stock has resumed its downtrend by forming lower highs and lower lows, indicating continued selling pressure on the weekly timeframe.” He sees the immediate support zone can act as a stop-loss for existing positions (750), while any bounce is likely to face resistance near the recent supply zone (850).
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