India’s largest lender and index heavyweight HDFC Bank engineered a 4% or 1,800 points fall in Nifty Bank which was its worst decline since March 2022. The stock fell 7.51% intraday, recording its second biggest decline in percentage terms since May 20, 2020, when it had tanked 7.86%.
All the 12 Nifty Bank constituents were trading in the red in the Nifty Bank index. The other major laggards were AU Small Finance Bank, Kotak Mahindra Bank, and Federal Bank, which were down by over 3%. Among the public sector banks, State Bank of India (SBI) declined the most at 2%.
HDFC Bank’s fall created a ripple effect in the entire banking and financial basket as Nifty Financial Services followed suit, correcting by over 800 points or 3.8% to test the day’s low of 20,646.75..
Read More: HDFC Bank shares tank 7% post Q3 earnings. What irked investors?
HDFC Bank’s correction comes on the back of its December quarter earnings on Tuesday where the private lender reported higher provisions on a year-on-year basis. Despite a 34% uptick in its net profit, investors appeared unimpressed by the outlook on loan growth and margins by top brokerages.
“If we talk about the overall market, then 21,650–21,500 is a key demand zone for the Nifty. Until buy-on-dip texture is continued, while below 21,500, we can expect short-term weakness towards the 21,000–20,800 zone,” Santosh Meena, Head of Research, Swastika Investmart said.
As for Bank Nifty, 46,500–46,250 is a key demand zone where we can expect a bounceback, Meena said, adding that below 47,250, there will be a risk of further weakness.
HDFC Bank’s Q3 earnings were the first among top Indian lenders that also include ICICI Bank, SBI, Kotak Mahindra Bank, Axis Bank and IndusInd Bank.
Following its earnings, top brokerages like CLSA and Morgan Stanley red-flagged loan growth and lower liquidity coverage ratio (LCR) while maintaining their buy and overweight ratings, respectively. Kotak Equities, on the other hand, cut its earnings estimates while retaining a buy. Nuvama has downgraded the counter to hold.
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