India’s largest private sector lender, HDFC Bank, continued its upward run as the stock remained higher for the fourth straight session on Friday, October 17, gaining 1.47% to ₹1,009 and inching closer to its record high of ₹1,018.85, touched in July.
The rally comes ahead of the bank’s September quarter results, scheduled for release tomorrow, October 18. The Street expects a muted performance, but any surprise on the margins front, which analysts anticipate, could propel the stock to remain higher and may boost the overall market sentiment.
“Strong results from banking majors such as HDFC Bank and ICICI Bank can provide fundamental support to the market. If Reliance Industries, which has been a laggard for some time, also joins the rally, the market could sustain momentum for longer. Muhurat trading and festive cheer may further add to the bullish sentiment,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
Meanwhile, the rally in the lender not only rewarded its shareholders but also supported the Nifty Bank index, which reached a fresh record high of 57,830 points in today’s session, taking its month-to-date returns to 5.4%. The gains also lifted the Nifty 50, which scaled to its highest level since October 2024 and is now just 2% away from its record high.
HDFC Bank Q2 earnings preview
Brokerage firm Emkay Global expects HDFC Bank to post stronger loan growth and a smaller margin contraction compared to Q1FY26, with credit costs likely supporting overall earnings. It added that slippages may decline, driven by a reduction in agri-related non-performing assets.
The brokerage projects the bank’s Q2 net interest income (NII) to increase about 5% year-on-year and 0.4% quarter-on-quarter to ₹31,561.1 crore, with the net interest margin (NIM) estimated at 3.4%, reflecting a decline of 22 basis points year-on-year and 7 basis points sequentially.
Motilal Oswal expects HDFC Bank’s cost ratios to remain under control, with asset quality likely to stay stable. The brokerage anticipates some moderation in margins and expects the credit-deposit (CD) ratio to reduce, noting that guidance for credit growth will be a key monitorable for the bank in the upcoming quarter.
The Reserve Bank of India has lowered interest rates by 100 basis points this year to revive consumption and investment amid a slowing economy. Rate cuts tend to squeeze banks’ margins in the short term, as lenders reduce loan rates faster than deposit rates.
Analysts expect a recovery from the second half of FY26, driven by stronger consumption, government tax relief, and faster growth in unsecured credit. Emkay expects NII to see a 2.3% YoY decline, operating profit to improve 2.8% YoY to 28.9%, and net profit to fall 0.5% YoY and 7.8% QoQ.
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